Interim report January - March 2004 for the Scribona Group
Continued earnings growth in first quarter thanks to rise in units sold
and sale of operations.
· First quarter sales reached MSEK 3,203 (3,121).
· Operating income for the quarter was MSEK 41 (-18) and net
income after tax was MSEK 27 (-19). This figure includes a net gain of
MSEK 40 on the sale of the Toshiba Document Solutions division.
· Earnings per share amounted to SEK 0.53 (-0.37).
· The PC market showed powerful growth in units sold and Scribona
succeeded in defending its market shares.
· Further restructuring and rationalization in the Danish
Comments from CEO Tom Ekevall Larsen
- The IT market continued to pick up speed during the first quarter.
Scribona has benefited from this growth and defended its market shares,
at the same time that Carl Lamm strengthened its "No. 1" position in
digital copyprinters for the Swedish office supply market. Prices for IT
products have remained largely stable compared with the fourth quarter
- Scribona reports a year-on-year increase in both unit sales (+22 %)
and sales revenue (+6%) for comparable units and at unchanged exchange
rates, despite a 15% decrease in the average PC price.
- The previous year's focus on cost-cutting and stronger margins, which
had visible effect in the fourth quarter of 2003, continued to yield
improvements during the quarter. However, earnings growth in our Danish
operations was not sufficient and we have launched additional action
programs which are expected to reach full effect in autumn 2004.
- The sale of the Toshiba Document Solutions division to Toshiba
TEC was completed at the end of March. This is a step in the ongoing
restructuring process aimed at boosting Scribona's profitability. The
sale made a positive contribution to income for the quarter.
Demand in Scribona's main markets rose during the first quarter of the
year with a substantial increase in PC units sold. According to IDC, the
Nordic market for PC products has grown by around 21% in volume compared
with the same quarter of 2003. However, exceptional price erosion has
reduced the value of market sales. Scribona's average PC price fell by
an average of 15% between years.
For document management products, we estimate that the number of copiers
sold in the Nordic market rose a few percentage points at unchanged
Sales and income during the first quarter
The Group's sales reached MSEK 3,203 (3,121), including a net gain of
MSEK 40 on the sale of the Toshiba Document Solutions division.
Excluding this gain, the increase between years was 1%. For comparable
units and at unchanged exchange rates, sales were up by 6%. The past 12-
month period has seen severe price erosion for PC products.
The Group's operating income was MSEK 41 (-18). Excluding the net gain
on the sale of Toshiba Document Solutions, operating income amounted to
MSEK 1. Restructuring costs relating to Scribona Distribution in Denmark
were charged against operating income in the amount of MSEK 7. Operating
income includes net exchange rate losses of MSEK 6 (2).
Stronger margins and a focus on high-margin products in all business
areas had positive effects. The completed cost-cutting and efficiency
programs yielded additional improvements during the quarter.
Efforts to boost profitability in Denmark have improved operating income
before restructuring costs, but these operations are still showing a
deficit. Additional action programs were announced on 30 March involving
the coordination of management and back office functions for the
Solutions and Distribution business areas in Denmark. In connection with
this, the staff will be downsized by a further 25 employees.
Net financial items amounted to MSEK -6 (0). The weighted average
interest rate on the Group's loans at the end of the period was 3.4%
(4.6%). Net penalty interest was positive at MSEK 1 (3).
Income before tax reached MSEK 35 (-18).
Income tax is reported at MSEK -8 (-1).
Net income after tax was MSEK 27 (-19) and earnings per share amounted
to SEK 0.53 (-0.37).
Cash flow and financial position
The Scribona Group's cash flow from operating activities for the first
quarter was MSEK -132 (-416). The Group's net investments reached +113 (-
financial assets at the end of the period totaled MSEK -85 (-141).
Capital employed was MSEK 992 (1,036) and liquid assets as per March 31
amounted to MSEK 430 (218). The Group's liquidity situation is
satisfactory with respect to the unutilized credit facility.
On February 24, 2004 an agreement was signed between Scribona AB and
Toshiba TEC for the sale of the Toshiba Document Solutions division in
the Scribona Brand Alliance business area. The transfer of ownership
took place on March 31, 2004, for which reason the division's first
quarter income statement is consolidated in the Group. The division's
operating income for the first quarter amounted to MSEK -1 (-4). The
division's balance sheet is not consolidated in the Group as per March
31. Capital employed in Toshiba Document Solutions at the end of the
period totaled MSEK 54.
The preliminary net gain on the sale amounted to MSEK 40. The final
proceeds are expected to be announced in connection with the third
quarter report for 2004 .
The number of employees at the end of the period was 1,088 (1,449). The
236 employees in Toshiba Document Solutions are not included in the
Group as per March 31.
Earnings per share for the first quarter totaled SEK 0.53 (-0.37).
Earnings per share over the past 12-month period amounted to SEK 0.92
(SEK 0.02 for the full year 2003).
Equity per share at the end of the period amounted to SEK 17.76 (17.53).
The equity ratio on March 31 was 28.0% (27.6%).
Return on capital employed over the past 12-month period was 7.8% (2.0%
for the full year 2003).
Return on shareholders' equity over the past 12-month period amounted to
5.4% (0.1% for the full year 2003).
The Parent Company's net sales during the period are reported at MSEK 30
(5), of which MSEK 5 referred to invoicing of rents to the subsidiaries.
The Parent Company's share of the net gain on the sale of Toshiba
Document Solutions was MSEK 25.
A receivable from a subsidiary was written down by MSEK 38 during the
period. Income before tax was
MSEK -23 (-6). Liquid assets at the end of the period totaled MSEK 206
(191). Net financial assets at the end of the quarter reached MSEK 180
The period's investments in fixed assets reached SEK 31,000 (0) and
total assets per 31 March amounted to MSEK 1,307 (1,257).
The fusion between the subsidiaries Copy Consult Svenska AB, Scribona IT
AB, Office Peking AB, Scribona Fastighetsservice AB, Scribona Office AB
and Scribona Solutions AB was completed during the quarter.
During the quarter, the Parent Company sold its holding in Office
Trademark Holding OTH AB and divested its shares in the subsidiary
Scribona Document Solutions AB in connection with the sale of the
Toshiba Document Solutions division.
DEVELOPMENT BY BUSINESS AREA
The sluggish market persisted throughout the quarter, with an estimated
volume decrease of 3% and estimated price erosion of around 5% compared
with the first quarter of 2003. The market for ERP systems remains
exceedingly weak. In this fiercely competitive climate, Scribona has
shifted its focus to segments with stronger growth and has chosen to
prioritize high-margin products. The business area's market shares are
assessed to be unchanged and Scribona is expected to defend its position
as the leading distributor of IT infrastructure products in the Nordic
With its excellent potential for development, this business area will be
an important part of Scribona's future.
Scribona is continuing its positive development and focusing of this
important segment towards complex and competence-demanding IT
First quarter sales in the business area reached MSEK 475 (478), down by
1%. For comparable units and at unchanged exchange rates, sales
increased by 3%. Operating income amounted to MSEK -7 (0). The volume
increase and focus on high-margin products and cost adaptations has
offset the effects of price erosion. However, sales to the ERP market
were significantly lower than planned.
According to preliminary statistics from IDC, unit sales of PCs in the
Nordic region during the quarter were up by 21% over the same period of
2003. IDC reports that PC unit sales rose 23% in the Finnish and
Norwegian markets, 21% in Denmark and by 20% in Sweden. The number of
PCs sold by Scribona during the quarter increased 22% over the same
period of 2003 to more than 128,000 units. Price erosion over the past
12-month period has been exceptional and Scribona's PC price has fallen
The business area's first quarter sales amounted to MSEK 2,350 (2,331),
an increase of 1%.
For comparable units and at unchanged exchange rates, sales improved by
5%. Strong development in Norway and Sweden helped to raise operating
income to MSEK 5 (-5) Restructuring costs in Denmark were charged
against operating income in the amount of MSEK 7. Although operating
income before restructuring costs has been strengthened by the action
program to boost profitability in Denmark, these operations are still
showing a deficit. Additional action programs were announced on 30 March
involving the coordination of management and back office functions in
the Solutions and Distribution business areas. These measures are
expected to generate further improvement in earnings during autumn 2004.
Scribona Brand Alliance
According to our assessment, the Nordic market for document management
products grew by a few percentage points at unchanged prices.
The business area's sales during the quarter amounted to MSEK 391 (465),
including a net gain of MSEK 40 on the sale of the Toshiba Document
Solutions division. Toshiba Digital Media, which was closed down in the
final quarter of 2003, reported sales of MSEK 137 in the first quarter
of 2003. Adjusted for these items, sales in the document management
divisions were up by 7%. Operating income in the business area reached
MSEK 50 (-6). Excluding the net gain on the sale of Toshiba Document
Solutions, operating income was MSEK 10.
Toshiba Document Solutions, which was sold on 31 March 2004, accounted
for MSEK 176 of the business area's sales and MSEK -1 of operating
The interim report has been prepared in accordance with the Swedish
Financial Accounting Standards Council's recommendation Interim reports
The same accounting and valuation principles have been applied as in the
most recent annual report with the addition of new recommendation issued
by the Swedish Financial Accounting Standards Council in 2004: Employee
benefits (RR29). Accumulated actuarial losses of MSEK 5 on defined
benefit pension plans in Scribona Norway, which were previously not
taken up in the consolidated accounts, have been reported in this
interim report according to the Swedish Financial Accounting Standards
Council's recommendation RR 5, Reporting of changed accounting
principle. This recommendation has also resulted in increased disclosure
requirements for Scribona's financial reports.
As described in the most recent annual report, the classification of
"Accrued compensation from suppliers" was changed during 2003. This item
is not longer offset, and "Accrued compensation from
suppliers" is instead reported gross under "Current operating
receivables". The comparative figures in the balance sheets per March
31, 2003 and June 30, 2003 have therefore been recalculated and
adjusted for offsetting by MSEK 300 and MSEK 209, respectively.
TRANSITION TO IFRS
With effect from 2005, all listed companies in the EU are required to
implement financial reporting according to IFRS. The consequences of
changeover for Scribona have been described in the annual report for
Interim report for
January - June 2004 15 July 2004
January - September 2004 20 October 2004
January - December 2004 9 February 2005
This interim report has not been subject to special
review by the company's auditors
The Board of Directors
Facts about Scribona
Scribona is the Nordic market's leading provider of IT products and
solutions, offering customers cutting-edge product expertise, the
industry's leading e-commerce system, optimized product availability and
a broad range of complementary services. Scribona's operations are
organized in three business areas:
· Scribona Solutions - value adding distribution of IT
· Scribona Distribution - effective volume distribution of IT
· Scribona Brand Alliance - exclusive agent for leading brand
SE-171 27 SOLNA
Telephone +46 (0)8-734 34 00
Fax +46 (0)8-82 85 71
The company's registered office is located in Solna, Sweden.
This report is also available at www.scribona.se.
For additional information, contact:
Tom Ekevall Larsen, President & CEO, telephone +46 (0)8-734 36 50
Örjan Rebeling, Executive Vice President, Chief Financial Officer,
telephone +46 (0)8-734 34 88
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