Annual report 2005

Transcription

Annual report 2005

Cybercom Group
2005 annual report
Sales +17%
Telecom +33%
Operating profit +112%
Cash flow from operating
activities +111%
Profit per share +98%
Cybercom Group • Box 7574 • 103 93 Stockholm, Sweden
Tel +46 8 578 646 00 • www.cybercomgroup.com
Contents
Driven by sense
The year in brief
1
President’s report
2
Business concept, goals, and strategies
4
Cybercom’s offering
5
Market overview
6
Business processes
8
Cybercom is a leading
Shareholder information
IT consulting company
The Cybercom Group Europe AB annual general meeting is on
28 April at 11 AM in Cybercom’s head office on Fleminggatan
20 in Stockholm. AGM participant registration starts at 10 AM.
that’s specialised in tele-
Shareholders who wish to participate in the AGM must:
com. Cybercom transforms
2005 ANNUAL REPORT
Directors’ report
12
Financial performance summary
16
Definitions
16
Consolidated income statement 18
Share data
18
Consolidated cash flow statement 19
Consolidated balance sheet 20
Change in equity – Group
21
Parent company
22
Accounting and valuation policies
23
Notes
29
Proposal of appropriation
38
Auditors’ report
39
Corporate governance report
40
Addresses
47
49
AGM
cutting-edge technologies
into commercially viable
solutions that enhance its
customers’ offerings.
•Be entered in the VPC AB share database by Saturday,
22 April 2006 (because banks are closed on this day, entry
must be made by Friday, 21 April 2006 at the latest).
• Have enrolled themselves, and the number of their
representatives’ who will attend the AGM, at Cybercom’s
head office by Tuesday, 25 April 2006 by 12 NOON. Shareholders whose shares are registered in the names of
nominees (through banks’ notaries or other administrators)
must temporarily register the shares in their own names if
they want to exercise their voting rights at the AGM; such
registration must be done with VPC AB well before
Saturday, 22 April 2006.
Notification of AGM participation
You may submit notification by:
•Mail and send it to: Cybercom Group Europe AB (publ),
Box 7574, SE 103 93 Stockholm, Sweden (write AGM
notification on the envelope), or
• Phone: +46 8 578 646 00, or
• Fax: +46 8 578 646 10, or
• E-mail: [email protected]
Please specify name, address, phone number, Swedish personal
identity number (or corporate ID), and number of shares.
Welcome!
Cybercom was founded in March 1995. The concept was to form a small, yet highly capable consulting company with the best
consultants in the business. In 1996, when Cybercom consisted of about a dozen consultants, the idea of creating a group was born.
Offering career opportunities enabled the company to attract and keep the right people. This proved to be a successful model.
Cybercom has had a growth strategy from the start. Growth is partly organic and partly achieved through strategic acquisitions.
Cybercom was listed on the stock exchange in 1999, which created greater potential for further expansion. In 2001, Cybercom set up
operations in Denmark; in 2002, in the UK; and in 2003, in Norway. During 2005, Cybercom gained a foothold in Asia by acquiring
Netcom Consultants with offices in Singapore. The Group currently has more than 400 employees in Denmark, Norway, Singapore,
Sweden, and the UK.
Interim financial reports
•January-March: Wednesday, 26 April 2006
•January-June: Thursday, 17 August 2006
•January-September: Wednesday, 18 October 2006
•2006 year-end: Thursday, 8 February 2007
THE YEAR IN BRIEF
1
The year in brief
• Sales rose 17% to SEK 476.2 million
• Profit after tax increased to SEK 24.5 million
• Profit per share improved to SEK 2.08
• Operating profit (EBIT) rose to SEK 31.8 million; the margin widened to 6.7%
• Improved position in telecom with a 33% increase in sales to SEK 362 million
• Cash flow improved to SEK 23.5 million
• Expanded internationalisation
Sales, SEK million
Profit/loss per share, SEK
Omsättning, MSEK
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2003
2004
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2005
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Cash flow per share, SEK
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400
Operating margin, %
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Total sales
Telecom sales
Revenue by industry
Revenue by project type
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Revenue by contract type
Average no. of employees
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Key data and ratios
2005
2004
2003
2002
2001
Sales, SEK million
476.2
405.3
309.7
344.8
396.2
Operating profit/loss, EBIT, SEK million
31.8
15.0
–111.9
–12.5
12.2
Operating margin, %
6.7
3.7
neg
neg
3.1
Profit/loss, SEK million
24.5
11.2
–110.7
–9.4
4.9
2.08
1.05
–11.70
–1.03
0.56
Cash flow per share, SEK
1.98
1.04
0.55
0.76
3.34
Ave. no. of employees
365
325
263
289
312
C Y B E R C O M A N N U A L R E P O RT • 2 0 0 5
2
PRESIDENT’S REPORT
On the right track
2005 was a good year for Cybercom. Operating profit improved considerably compared
with 2004 and rose to SEK 31.8 million (15.0). This demonstrates fantastic performance
on the part of Cybercom’s employees, and I’m very proud of it.
The year started with continued downward pricing
pressure in our competitive market, but the situation
stabilised during the second quarter – thanks to
increased demand. The trend toward an improved
market position continued throughout 2005, primarily in the Öresund region; this trend also applies to
specialist expertise that Cybercom offers in its areas of
operation.
Since the downturn that began in March 2000, we
have acted proactively to develop our business and to
position the company as a leading IT consultancy
within telecom. During the last four years, we worked
hard to give our customers a clear offering that they
could use to develop their businesses. At the same
time, we implemented a programme to improve our
corporate cost structure and productivity. We also
improved efficiency within our organisation – to
better meet market demands.
A focused organisation
Refining our operation made us stronger. Today,
Cybercom is a homogeneous company that’s focused
on telecom and selected technologies. We made the
organisation more efficient by identifying and
discontinuing operations in which we have not
succeeded in providing sufficient value for our
business or for our customers.
Our financial strength gives us crucial freedom of
action, so we can be proactive. During the year, we
recruited valuable specialist expertise for our operations areas, entered important partnership agreements
with leading suppliers, and formed partnerships with
companies for offshore activities. This further
strengthened our position.
A strong offering
We reviewed what we offer and focused on growth
within telecom and our selected technologies. We
identified our most key business areas, and we
acquired companies and operations that fit with this
strategy.
In April 2005, we bought Netcom Consultants – a
well-established telecom consulting company. This
acquisition increased our consulting and services
capacities for telecom management and networks. The
C Y B E R C O M ANNUAL REPORT • 2005
acquisition was strategic and aligned with our focus
on telecom: it broadened our international presence
and added important new customers.
Since 2000, when we adopted our telecom strategy,
we focused on growth. We succeeded in expanding
what was an SEK 60 million business into a business
currently worth about SEK 360 million. During the
years, we have prioritised international growth,
significantly increasing the percentage of international
projects. Recognition from our customers, primarily
multinationals, is evident through projects that
require close co-operation with them on a global
market.
Balanced growth
Our ambition is to continue to grow organically and
via acquisitions. We intend to increase organic growth
from today’s level at a target of 10% 2006, and we
will continue to make acquisitions that supplement
our core operations. But we will not acquire companies simply for the sake of growth; all acquisitions
must focus on profitability and create value for the
company and its shareholders.
For us, it’s about balancing growth over time. We
are within reach of our sales target of SEK 750 million
and have plans for how we will achieve it. Our focus is
always on the long term, and we prioritise our
profitability. The current target is to attain a margin of
at least 10% before the end of 2006.
The market
Since the IT bubble burst in the early 2000s, much has
happened on our market, and our industry experienced fundamental changes.
Technology no longer solely sets the market in
motion. Consumers are now much more in focus.
Market and user perspectives increasingly drive
trends. More than ever before, we must understand
what various users want and then work actively to
develop their desired solutions.
Telecom industry participants’ core and businesssupport operations are highly IT intensive. This puts
incredible demands on IT-based security and accessibility solutions, for example. At the same time, the
solutions are increasingly complex because they are
PRESIDENT’S REPORT
3
“We succeeded in
expanding what was a
SEK 60 million telecom
business into a business
currently worth
SEK 360 million.”
based on a variety of communicating systems and
applications. In addition, production rates are pushed
to extremes.
Cybercom is a niche player in telecom, with growth
figures that outperform the industry as a whole. We
have valuable framework agreements with our biggest
customers, which proves that they chose to prioritise
us for future collaboration.
Cybercom – Driven by sense
A common strategy is needed to build a strong
company. For an operation like Cybercom, which is
run by committed, highly competent people who are
interested in technology, it’s important to reach
consensus regarding market conditions and future
direction. By following our strategy, customers’ needs,
and technology trends, we have quickly established
Cybercom as a leading IT consultancy in the telecom
field, and we have done so in a period that witnessed a
general market collapse.
Our concept – making technology commercially
profitable for our clients – drives Cybercom’s development. Cybercom reviews, optimises, and uses
technology to create the best possible solution. Our
values, together with our strategy, form the basis of
our new brand platform. Our motto, Driven by sense,
illustrates our ambition to use leading technical
expertise in combination with acute business acumen
to create future solutions together with our customers.
Cybercom’s employees possess a unique sense for
linking technology to business, which adds common
sense to technological advances and customerrequested solutions. In doing so, we also provide
special added value for our customers.
I am optimistic. Our business is growing, and our
company is well organised. We foresee strong demand
for our services on a growing market. We help
companies develop mobile solutions for their operations – thus facilitating more competitive, innovative,
flexible working processes. That way, users and
society can really benefit from the freedom and
advantages that mobility provides.
Mats Alders
4
BUSINESS CONCEPT, GOALS, AND STRATEGIES
From a shareholder’s perspective, Cybercom’s primary task is to lay the foundation for
continued growth. The company’s business concept, vision, objectives, and strategies rest
on this foundation.
Business Concept
Cybercom creates business success by using leadingedge technologies.
Vision
To be the preferred partner for delivery of missioncritical solutions in telecom and leading-edge
technologies.
Overall goal
Cybercom’s overall goal is to be a growth company
with good profitability and value for shareholders.
Profitability will be prioritised. Through specific
know-how in telecom and leading-edge technologies,
Cybercom will create value for shareholders, customers, and employees. The long-term objective is for
Cybercom to become an established, international
solutions supplier within telecom. Turnkey projects
will comprise 40–60% of its revenue.
Financial goals
Cybercom’s financial goals are to attain an operating
margin of at least 10% by year-end 2006. The
company expects organic growth of 10% in 2006 and
intends to continue its acquisition strategy to reach its
previously announced sales target of SEK 750 million.
Cybercom’s equity/assets ratio target will be continually assessed to attain optimal yield for shareholders.
Attainment of targets in 2005
Cybercom continued to develop its business with
focus on telecom. In 2005, the company’s profit rose
17%. Cybercom’s growth in telecom was 33%; sales
reached SEK 362 million. Its telecom operation
accounted for 76% of the Group’s total sales. In 2005,
Cybercom bought Netcom Consultants, which further
strengthened Cybercom’s offering and focus on
telecom. The proportion of international projects and
projects on new geographic markets increased.
Turnkey solutions accounted for about 40% of the
year’s sales, which provided Cybercom with stable
revenue flow.
Strategies
Cybercom will achieve its goals by focusing on telecom,
technologies, and growth. The sales target of SEK 750
million and the profitability target of a 10% operating
margin by year-end 2006 will be achieved by:
• Focusing the business on four core areas: telecom
management and networks; portals and mobile
solutions; e-commerce and billing; and embedded
systems.
• Broadening the customer base and increasing
internationalisation for a global telecom business.
• Supplementing organic growth with growth
through acquisitions.
• Developing spin-off deals outside telecom, in areas
where Cybercom has unique technological
expertise.
• Developing offshore-related offerings.
• Implementing brand-development activities.
Cybercom’s strategic position
The model shows that Cybercom can earn money by dominating a
sector, i.e., positioning itself to the right of the curve, or by
specialising in a limited niche – a position to the left of the curve.
The dangerous position, where margins are often lower, relates to
companies too large to be niche players but too small to be sector
leaders. Today, Cybercom’s core areas are positioned as sector
leaders or as powerful players in a specific niche.
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CYBERCOM’S OFFERING
5
Cybercom is a specialised IT consultancy that targets
mobile solutions. Its services are primarily for the telecom sector
and key customers in other sectors.
Cybercom’s offering falls into these areas:
Telecom management and networks
Cybercom offers expertise and consulting services in
the telecom management and network areas. Cybercom’s reputable consultants use the latest technologies
to help international customers develop their businesses.
Portals and mobile solutions
Cybercom develops and runs portals for several
international enterprises. Using its extensive experience, Cybercom helps customers create new digital
services and offerings that are provided via the
Internet or mobile devices.
E-commerce and billing
Cybercom supplies the entire business-process value
chain in e-commerce. Cybercom also develops specific
billing and customer care modules for telecom
operators and service providers.
Embedded systems
Cybercom develops and builds applications and
communications software for mobile telephones and
other devices in mobile broadband networks.
Cybercom plays a key role in device-management
standardisation.
How Cybercom meets its commitments:
Application management and projects
Cybercom develops and builds solutions in specific
projects and offers maintenance and further development of systems in operation, i.e., application management (AM).
Technologies
Cybercom consultants are specialised in Java, .Net,
WebSphere, Oracle, J2EE, and Akamai solutions.
Mastery of the underlying technologies is fundamental
for being able to select, design, and implement the best
solutions.
Core values
Cybercom has agreed on several core values that describe
the company and what it stands for. These show what
Cybercom represents, today and in the future, and they
are closely linked to the company’s business concept.
Cybercom’s core values are:
Competence
Cybercom is well established on the telecom market, and
its consultants are always updated about the latest events
and phases within services development in their areas of
expertise. This ensures that Cybercom stays on the
leading edge in providing solutions and offerings to
customers, and it enables the company to act as a
discussion partner during new services development.
Openness
Cybercom will have an open, responsive organisation
that always listens to customers’ and colleagues’ needs.
The company will do its utmost to act within given
business frameworks. Our management demonstrates
respect, and our company reflects openness – internally
and externally.
Passion
Working at Cybercom means taking clear responsibility,
initiative, and action. Showing passion means being
involved and seeing the whole picture and acting in the
best interests of customers and colleagues within
appropriate areas and applicable business frameworks.
Involvement and responsibility are key success factors in
projects.
Customer focus
Customers’ businesses are a top priority for Cybercom’s
consultants. Customer benefit is always at the top of the
agenda, and this is demonstrated through Cybercom’s
growth and an increasing number of attractive projects
from its existing customers. Everyone at Cybercom is
jointly responsible for the entire company and its
business. We must always keep our promises and be
reliable in all internal and external business relations.
6
MARKET OVERVIEW
A global market with stable growth
The global telecom industry had sales of nearly SEK 10,000 billion in 2005, and growth is expected
to average 6% annually until year-end 2010. The trend to replace fixed telephony with mobile
communication continues, and mobile communication grows twice as fast.
In Europe, mobile communications account for
between 30-35% of all telecom use. Globally, the
figure is higher because many developing countries
often lack the old infrastructures on which fixed
telephony is based. Mobile communication accounts
for most of industry’s future growth; it is expected to
grow 10-14% annually until year-end 2010.
Globally, there are currently more than two billion
mobile telephone accounts, and the industry estimates
the number will have passed three billion by year-end
2010. Use of mobile telephony continues to increase,
driven by increased competition and increasing
mobility of services that range from e-mail and music
to positioning and film. The greatly increased volumes
in mobile communication are expected to continue,
but pricing pressure will probably limit sales growth.
Redefining telecom
The positive market climate in the telecom sector is
primarily noticed among international operators that
are now investing in development of new areas and
services. At the same time, traditional telecom is being
successively redefined. Merger of telephony, data traffic
(e.g., broadband), and TV is in full swing. An increasing number of operators offer triple play package
solutions so that consumers can get everything from a
single supplier. One trend already underway is
expansion of triple play to quadruple play, because
mobile telephony is also included in the package.
With calling costs rapidly decreasing, operators are
broadening their offerings to compete for customers
and find new revenue streams. Operators still
primarily get revenue from voice traffic and SMS, but
these revenues are gradually declining. At the same
time, interest is growing in investing in new, more
sophisticated services. A gradually increasing share of
operator revenue will come from other types of
content services or digital media. Among new services,
music in mobile telephones has quickly become
popular, and the range of TV services in mobile
devices might skyrocket in 2006 as new mobile
telephone models are launched.
Telecom operators and others in the telecom sector
offer the services, but the content is developed and
provided by the music industry, terminal manufactur-
ers, and news agencies. The increasing influence of the
content providers over the range of services offered by
operators creates a need for new business models and
payment functions. There must be easy ways for
consumers to pay for the services they use and for
content providers and telecom operators to get paid.
So for division of revenue between operators and
content providers, new payment solutions and pricing
strategies are being developed.
Mobile telephones are also becoming more
sophisticated and can accommodate more services.
This creates a new market for highly innovative
products. While software services are being developed, new solutions are required for the physical
products as product life cycles become shorter. This
places greater demands on efficient development and
production.
Continued consolidation
In recent years, telecom witnessed a trend toward
consolidation through several major acquisitions and
mergers. There are clear indications suggesting that
consolidation will continue, because economies of scale
are a prerequisite for efficient operation and low prices.
Consolidation has also continued on the Nordic IT
consulting market, with several acquisitions and
mergers. This trend resulted in IT sector segmentation;
here, global players – with broad expertise and sights
set on large, complex projects – comprise one segment.
The next segment consists of specialised consulting
companies that are also relatively large; these offer
development and solutions in special niches, often with
high technological content. Cybercom is in this
segment. The third segment consists of pure resource
consultants that sell consulting time and certain
functions. In this segment, the degree of specialisation is
low, and prices are pressed. Companies in the third
segment often function as subcontractors to consulting
companies in the first two segments.
Competitors
Cybercom has several competitors in various market
contexts. Competitors range from large, global
companies such as Accenture, Capgemini and Incode
to local companies such as TietoEnator, Teleca, Sigma,
MARKET OVERVIEW
Enea, and HiQ. Competitors also include many
specialised consulting companies that operate on the
international telecom market.
Increased activity level
Activities on the IT market took off in 2005. Business
development (in order to increase sales) now drives
investments. Companies within telecom have been
especially keen on investing, and once again, focus is on
expansion and increasing market shares. Equipment
manufacturers are investing in mobile handsets,
terminals, and associated support systems, and they are
concentrating efforts within product development and
support systems. Outside Europe, operators are
investing in growth initiatives through major, new
network constructions. Nordic telecom operators
continue to concentrate on cost-cutting and consolidation programmes. But there’s a greater tendency for
new investments in support systems for mobile and
broadband services.
Increased investment activities that occurred
within the telecom industry in 2005 are expected to
continue in 2006, although at a somewhat slower
pace. Consultants with telecom expertise now benefit
from customer’s demands (in all segments) for mobilesolution development and implementation – to
improve competitiveness and efficiency. Companies
that had dammed-up needs after recession cutbacks
are among the IT-consulting-services purchasers,
which make the most IT investments. Operations and
IT systems consolidation means an increase in
integration projects.
Outsourcing
A strong driving force on the IT service market continues, i.e., the trend to discontinue certain business
functions and buy external services. Development and
management of IT systems and testing operations are
examples of areas that customers often outsource.
Customers frequently choose to retain overall responsibility and purchase parts of systems or solutions for
specific application areas. In these cases, expert consultancies, such as Cybercom, are often commissioned.
Increased mobility for IT consultants
The improved market for IT consultants, primarily
within telecom, led to continued mobility on the
consulting market in 2005. After several years of
cutbacks and discharges, many consulting companies
now need to recruit. The labour market for consultants
7
shows a fragmented picture, where the degree of specialisation, competence, and experience determines demand.
Large customers and fewer providers
A few large companies dominate the telecom market.
Consulting companies are becoming larger, while
streamlined procurement means that instead of having a
hundred different suppliers, customers sign master
contracts/frame agreements with about 20 selected
companies. These agreements mean long-term relationships and put greater demands on the selected suppliers.
Size, niche offerings, and international presence are
increasingly key factors for consulting companies.
Similar trends throughout the Nordics
Market trends in Norway and Denmark indicate
increased activity, albeit with less exuberance than in
Sweden. The Öresund region shows the greatest
upswing and is expected to continue to be the most
powerful engine. The Danish market differs from the
Swedish in that it is much more fragmented and
dominated by medium-sized customers. Consequently,
suppliers need not be very large. The telecom market in
Norway primarily consists of telecom operators and
service providers; equipment manufacturers previously
located there have largely disappeared. Finland has a
market pattern that resembles Sweden’s, with a small
number of large customers in the telecom sector. The
price pattern in the Nordics is similar, with stabilised
levels in local currency.
Cybercom’s position in the value chain
Cybercom’s largest customers are mobile phone manufacturers, system suppliers, and mobile and fixed network operators.
Our business activities provide telecom with technologies for
its phones and networks, and our extensive telecom expertise
enables us to offer unrivalled technology solutions to companies
outside telecom.
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8
BUSINESS PROCESSES
Management and control for increased profitability
A fluid market – on which customers have great expectations for quality and deliverability – puts heavy demands on organisation and management. That’s why Cybercom implements processes to make the company an attractive supplier and employer and to enable
better control and increased profitability.
Ensuring profitability requires continual business
evaluation and analysis using well-developed working
methods that enable decision support.
Business processes and operative systems were
created for retaining and applying knowledge and
experience that the organisation continually generates. Results are continually documented. Clear, userfriendly processes improve quality of analysis and
decision-making and facilitate knowledge transfer.
This also reduces risk of losing important experience
and know-how when key people leave.
Cybercom has three main processes in its operation; they are of fundamental importance for its
continued success:
• Business development – made up of all activities
related to Cybercom solutions, commitments, and
services – from offering to development.
• Sales – concerns all activities; planning and
operative work related to sales and customer
relations.
• Delivery – comprises all activities related to
production and delivery of solutions; commitments
and services; and follow-up and evaluation,
together with customers.
Several support processes, such as those implemented
by market communication, HR, IT, and finance
complement the main processes.
Business development
Existing or new solutions and services are developed
in close collaboration with customers. Examples of
areas in which extensive collaboration occurs are
embedded systems, portals, and billing solutions. New
solution development can specifically target a single
customer or can be a general solution for a wider
market. Usually, Cybercom receives an invitation to
tender from a customer regarding a solution with
specific properties. This can involve adaptation of an
existing solution or development of a totally new one.
New solution development can be lengthy – taking
6-18 months from concept to large-scale implementation. Cybercom’s objective is to add more to the value
chain – to gradually increase the volume of development work.
Key customers
Cybercom’s business monitoring focuses more on key
customers than on geographic markets. This is natural
because most companies in telecom operate on a
global or regional market. This is also reflected in
Cybercom’s strategy for international expansion. The
The Cybercom model provides a general overview of its methodology – from concept to implementation and customer delivery.
Sales
Cybercom
continuously
works with
prospecting – and
proactively to
meet customers'
possible future
needs.
Sales
Needs analysis
Together,
Cybercom and
the customer do
a needs analysis
to identify and
detail scope and
technical
specifications.
Stage 1
Needs analysis
Strategy
Cybercom proposes
selected solutions
that match the
customer’s needs.
Implementation
Cybercom
develops the
selected solution,
implements, tests,
and puts it into
operation.
Stage 2
Business case
Stage 3
Strategy
Stage 4
Implementation Management
Evaluation and/or continued development
Management
After start-up,
Cybercom can
manage the
solution via an
application
management
contract.
Business case
Cybercom analyses
available
technologies to
fulfil technical
requirements and
customer
requirements on
profitability.
BUSINESS PROCESSES
company follows its customers when they expand
onto new markets, and it does not initiate new
business in markets where existing customers are not
already present.
Good relationships with key customers constitute a
critical success factor for Cybercom. Ensuring
Cybercom’s position in collaboration with these key
customers requires extensive central co-ordination
and management. The company’s customer account
managers have total responsibility for business
relationships with our customers, and this places enormous demands on the people in those positions.
Cybercom provides customer account managers with
support from other company functions, via backing
from executives and new concepts.
demand shorter lead times. To meet their expectations
and support continued growth, a uniform business
and support system was introduced in all subsidiaries.
The Group continually conducts market analyses to
ensure that it has a good understanding of customers’
needs and market trends. The objective is to always be
updated on leading solutions and concepts and future
expectations. IT is an integrated part of the work.
Documentation and data storage are important
factors, and they represent considerable value.
Operating procedures are documented in the information security policy and in business support systems.
Cybercom continually conducts systematic security
initiatives to protect data and systems against
perceived threats.
Quality
Improving competitiveness on the international
market requires Cybercom to consistently fulfil
customer service, quality, and precision requirements.
The objective is to always maintain high quality
within the organisation – in everything from soft
factors, such as personal contacts and service to
concrete solutions. One of the most key objectives is
delivery quality. Here, Cybercom must always have
100% satisfied customers. All of Cybercom’s quality
measures are implemented as per ISO 9001 and are
based on continual improvement of quality measures.
All processes in the company are continually subjected
to quality audits.
Branding
Cybercom’s branding is primarily based on three basic
documents: the brand platform, the communication
platform, and the graphic profile. The brand platform
defines the fundamental values of the Cybercom
brand, the communication platform defines how the
brand is to be communicated to its various target
groups, and the graphic profile defines how the
brand’s visual identity should be perceived and
controlled. The objective of branding is to draw
attention to the company’s solutions and their unique
values, to distinguish Cybercom from its competitors,
to stimulate positive associations to, and expectations
of, the brand, and to promote creation of a clear,
precise focus internally.
In 2005 Cybercom undertook internal Group-wide
measures related to branding and produced the
Cybercom – Driven by sense communication model,
based on Cybercom’s values and culture.
Environment
Cybercom does not conduct activities that require
permits or notifications. Its environmental work
consists of minimising environmental impact through
efficient resource usage in all areas. Its operation has
low impact on the environment, and mostly consists
of using office materials and disposing of old computers. Hardware suppliers are required to comply with
the TCO 95 and TCO 99 environmental requirements, and all materials must be marked for efficient
recycling. Each year, Cybercom participates in
Folksam’s Climate Index/Green Index for stockexchange-listed companies. Among other things, the
index measures carbon dioxide emissions. Cybercom’s
efforts in this area are aligned with good practices.
9
Finance
Cybercom’s focus on increased profitability assumes a
careful evaluation of planned and implemented
measures, assured through continual financial
reporting and profitability monitoring.
Financial reporting is based on the annual budget
and is followed up monthly. Continuous reporting
provides a good basis for its quarterly forecasts.
In total, financial information enables Cybercom
to continuously identify potential and risks and to
determine which active measures must be prioritised.
IT
The Group’s objective is to continually improve use of
IT support in all processes. Cybercom’s customers
10
BUSINESS PROCESSES
Employees
One important task of Group management is to
continually work to develop an organisation with
uninterrupted flows, distinct organisational boundaries, and clear allocations of responsibility between
various functions. This also includes optimal resource
use for staffing, recruitment, and skills development.
Cybercom’s basic concept of always working from
customers’ needs assumes that every employee is
responsible for relationships and quality. This puts
great demands on employee skills and judgement and
requires consultation and interaction within and
between various units in the Group.
Cybercom works with a variety of professional,
demanding customers. This creates strong incentive to
develop the company’s capabilities and offering,
because its goal is to be perceived as a leading supplier.
Keeping key employees and attracting new ones
are strategic matters for the Group. A long-term
approach to skills provision is of utmost importance.
Skills development is one of the most crucial prerequisites for Cybercom’s future development.
In 2005, Cybercom’s rapid growth led to a large
recruitment need to meet market demands for its
services. About 90 new employees were hired during
the year. These were primarily consultants with skills
in selected technologies or with niche experience from
telecom. Further recruitment will occur in 2006.
In 2005 the average number of employees was 365
(325). The total number of employees on 31 December 2005 was 426 (375). Of the employees, 22% were
women and 78% men. All employees have a high level
of education: 90% with academic credentials. In
2005, costs for external training exceeded SEK 1.6
million (0.7). The average age in the Group was 36
(37), and the average number of years of industry
consulting experience was 11 (13). Personnel turnover
was 10% (9), excluding adjustment in the Financial
Services division. Value added per employee was SEK
856 thousand (832). HR cost was the largest expense
item, which accounted for 64% of the Group’s total
costs.
HR policy
Cybercom’s HR policy is based on the idea that the
employee is the primary source of profitability and
success. The route toward Cybercom’s vision is via
employees’ abilities to turn their personal and
professional visions into reality. The working
environment should be a comfortable climate that
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BUSINESS PROCESSES
promotes the growth of ideas, initiative, participation,
and flexibility; this climate should enable employees
to take advantage of new opportunities. The company
will also stimulate employees’ motivation to ensure
that they are always in sync with technological
developments. Improved support for performance
appraisals and professional development discussions
is continually introduced.
To encourage employee development and ensure
that Cybercom can always offer the best consultants
on the market, Cybercom works actively with skills
enhancement in leading technologies and with
strengthening employees’ allegiance to the company.
There is continual monitoring and evaluation of
which business areas, services and products are to be
prioritised and which general skills must be enhanced
in the company. Skills enhancement occurs in external
courses, expert groups, and customer projects. Besides
pure skills enhancement, a series of seminars is held to
promote the company culture and the Group’s
technical interests. In addition, Cybercom always
submits project results so that customers can optimally implement the results in their operations.
Cybercom produces detailed plans for skills transfer
in close co-operation with its customers.
FACTORS THAT AFFECT CYBERCOM
Market changes
A few large companies dominate the telecom market.
This trend means that instead of having a hundred
different suppliers, customers enter master contracts/
frame agreements with about 20 selected suppliers.
These agreements lead to long-term relationships and
greater demands on the selected suppliers. Size, niche
offering, and international presence are increasingly
important factors for consulting companies. Today,
Cybercom has frame agreements in all bigger business
relations, which together account for 80% of Cybercom’s sales.
Sensitivity to economic downturn
Customers partly adapt their businesses and IT
investments to market conditions. That’s why
Cybercom positioned itself so that market swings have
a limited effect on business and revenue. Cybercom
offers turnkey solutions in close collaboration with
customers.
11
Acquisitions
Part of Cybercom’s growth strategy is to acquire
companies. Cybercom developed a strategic method to
ensure that integration occurs as quickly and efficiently
as possible.
Customers
Cybercom’s ten biggest customers account for 79% of
its income. Cybercom has maintained long relationships with many of its customers. Among Cybercom’s
largest customers are ASSA ABLOY, Ericsson,
Millicom, Nokia, Reuters, SEB, Sony Ericsson, Tele2,
Telenor, TeliaSonera, and Teracom.
Competitors
Market fluidity means that the players, offerings, and
pricing models constantly change. Establishing a niche
and positioning itself in relation to other players
enables a company to create its own market sphere.
Cybercom clearly has a niche offering. Cybercom has
several competitors in various market contexts.
Competitors range from large, global companies such
as Accenture, Capgemini and Incode to local companies such as TietoEnator, Teleca, Sigma, Enea, and HiQ.
Recruitment and skills
Skilled consultants are a prerequisite for successfully
implementing customer projects and acquiring
satisfied customers. When hiring personnel, Cybercom demands a great deal regarding skills and
experience, and the company works actively to ensure
that it has access to the right skills and expertise.
Sensitivity analysis
This summary shows the effect on operating profit/
loss of a 1% change in certain factors, calculated on
the 2005 outcome:
+/– 1%
SEK million
Price to customer
3.8
Amount/degree of invoicing
2.5
No. of consultants
0.6
Staff costs
2.8
Recognised effects should be seen independently of
each other and presume that other factors have not
changed.
12
DIRECTORS’ REPORT
Director’s report
The board and CEO of Cybercom Group Europe AB (publ), corporate ID 556544-6522,
hereby submit their annual report for the 1 January 2005 - 31 December 2005 period.
This financial presentation covers:
• Directors’ report
• Income statement, Group and parent company
• Balance sheet, Group and parent company
• Cash flow statement
• Notes to the statements
All amounts are recognised in SEK thousand unless
otherwise specified. Numbers enclosed in parentheses
refer to the previous year.
THE OPERATION
The Cybercom Group is a high-tech consulting operation that offers business-critical IT solutions primarily in
telecom and selected technologies. Cybercom was
launched in Sweden in 1995 and has been listed on the
Stockholm stock exchange (Stockholmsbörsen) since
1999. The Group has customers worldwide and offices
in Denmark, Norway, Singapore, Sweden, and the UK.
Cybercom’s customers are top international
players that operate on technology’s leading edge and
seek specialised partners. Consequently, Cybercom’s
unsurpassed position, with operations know-how and
technological expertise, has won their trust. Frame
agreements (master contracts) are business critical,
because customers are outsourcing greater volumes of
work with fewer consulting companies. During 2005
and just before 2006, Cybercom retained and renewed
frame agreements with all of its large customers; this
ensures extensive current business and is decisive for
continued growth. Commitments to Cybercom’s ten
largest customers constituted 79% of its sales in 2005.
Cybercom develops, integrates, tests, verifies, and
runs application management (AM) projects within:
• Telecom management and networks
• Portals and mobile solutions
• E-commerce and billing
• Embedded systems.
Much of Cybercom’s operation involves turnkey
solutions and AM, which provide stability. Turnkey
solutions represented 40% of sales in 2005. Cybercom’s largest customers are ASSA ABLOY, Ericsson,
Millicom, Nokia, Reuters, SEB, Sony Ericsson, Tele2,
Telenor, TeliaSonera, and Teracom.
Cybercom entered 2005 with a well-defined
strategy for focusing on telecom and selected technol-
ogies. This strategy was successful. It strengthened
growth and profitability during 2005, when Cybercom’s sales in telecom increased 33% to SEK 362
million. Most growth occurred with existing large
customers; here, Cybercom mainly increased its
commitments to equipment suppliers. Total sales rose
17% compared with 2004; this includes discontinuation of its financial services division, which reduced
volume from subcontractors.
A few attractive projects in 2005:
• Audits of radio core networks in several Asian and
African countries.
• Several billing solution projects, including a
TeliaSonera Sweden solution for invoicing electronic
refill cards for mobile cash card customers.
• New functions development in a telecom network
simulator that replicates operation and maintenance functions in 2G and 3G telecom networks.
• Teracom’s municipal broadband expansions; here,
Cybercom is managing the projects and is responsible for planning and rollout.
• Solutions development for several new customers
(e.g., Charles Stanley and O2 in the UK), using
IBM’s WebSphere™ e-commerce suite.
• Continuing AM commitment and new development projects related to Sony Ericsson’s entire
consumer portal at www.sonyericsson.com.
• Large portal development projects for Teknikföretagen and ASSA ABLOY, along with a project
management role for a new Internet bank.
• Important turnkey solutions for systems testing
and verification of mobile phone platforms.
• A leading project within device management, i.e.,
systems for upgrading mobile phone software.
• Development of an open interface for service and
maintenance of mobile phones, such as for
upgrading software, troubleshooting, testing
terminals, and configuring users. This is a joint
project with Nokia, Sony Ericsson, and BenQ
(previously Siemens) for developing the Open
Mobile Service Interface (OMSI), where Cybercom
was appointed OMSI forum administrator.
• Advisory roles for strategic decisions concerning
offshore and/or nearshore initiatives.
• International master contract with Telenor.
DIRECTORS’ REPORT
SALES AND INCOME
CASH AND CASH EQUIVALENTS
Sales for 2005 amounted to SEK 476.2 million
(405.3), a revenue increase of 17% compared with
2004. Operating profit strengthened considerably
compared with 2004 and amounted to SEK 31.8
million (15.0). This corresponds to an operating
margin of 6.7% (3.7).
Net financial items stood at SEK 4.5 million (2.3).
Profit after net financial items reached SEK 36.3
million (17.3), which yields a strong 7.6% (4.3) net
margin. Excluding a one-time cost of SEK 3 million,
which burdened the Sweden business division in
Q1 2005 due to merging of the Swedish business
divisions, operating profit for 2005 amounted to
SEK 34.8 million – resulting in a 7.3% operating
margin and an 8.3% net margin.
On 31 December 2005, the Group’s cash and cash
equivalents amounted to SEK 55.5 million compared
with SEK 47.7 million on 31 December 2004.
During 2005, cash flow before change in working
capital was SEK 38.8 million. The change in working
capital was SEK –15.3 million. In total, cash flow
from operating activities was SEK 23.5 million (11.1).
13
FINANCIAL POSITION
Equity as of 31 December 2005 was SEK 238.2 million
(180.1), which corresponds to a 67.7% (66.0) equity/
assets ratio. Equity per share amounted to SEK 19.33
(16.08).
BUSINESS DIVISIONS
Cybercom’s operation has two divisions: Sweden and
International. International includes operations in
Denmark, Norway, and the UK. Sweden’s sales rose
19% compared with 2004 and International’s sales
rose 6%; the Danish operation demonstrated the most
growth during the year.
Sweden division
SWEDEN, SEK MILLION
Sales
Operating profit, EBIT
Operating margin, %
No. of employees at year’s end
International division
JAN-DEC
JAN-DEC
Q4
Q4
Q3
Q2
Q1
2005
2004
2005
2004
2005
2005
2005
422.2
27.6
6.5
348
354.8
21.2
6.0
285
114.2
7.5
6.6
348
103.1
9.1
8.8
285
91.1
4.6
5.0
329
112.5
9.6
8.5
329
104.3
5.9
5.6
286
JAN-DEC
JAN-DEC
Q4
Q4
Q3
Q2
Q1
INTERNATIONAL, SEK MILLION
2005
2004
2005
2004
2005
2005
2005
Sales
Operating profit, EBIT
Operating margin, %
72.8
5.2
7.1
56
68.5
1.8
2.6
60
20.9
1.2
5.7
56
16.8
1.0
6.0
60
16.5
1.8
10.9
61
18.1
1.2
6.6
56
17.3
0.7
4.0
56
14
DIRECTORS’ REPORT
IMPORTANT EVENTS IN 2005
Acquisition of Netcom Consultants
In April, Cybercom acquired Netcom Consultants
through an agreement with Modern Holdings.
Netcom was consolidated into the Sweden division in
May. The fixed purchase price was SEK 35 million,
which was paid for with 1,125,402 newly issued
Cybercom shares and SEK 2.5 million in cash. An
additional purchase price of SEK 1.8 million related to
2005 sales was determined in December. The acquisition contributed 9% to growth in 2005. Netcom
Consultants is an international telecom consultancy
specialised in networks, billing, technology, and
services development. Integration of Netcom Consultants has provided good business effects, e.g., a
broader customer base and new markets. With a
strong offering within telecom management and
telecom networks, it complements Cybercom’s other
operations. This benefits our business with large
customers.
CyberMate sold
Medtronic, a leading medicine technology group,
acquired CyberMate PreHospital, Cybercom’s
electronic journal management system for emergency
care and its associated operation in April. Intangible
assets of SEK 15 million were converted into cash and
cash equivalents, which strengthened the cash
account. And an additional purchase price of SEK 1.6
million is recognised as income for 2005. The deal
covered investments Cybercom made in the operation
and resulted in a positive effect on the cash account.
This sale is a step on the way toward Cybercom’s
focus on telecom and selected technologies.
THE SHARE AND SHAREHOLDERS
Share capital
On 31 December 2005, Cybercom’s share capital
amounted to SEK 12.3 million, distributed on
12,321,757 shares. All shareholders have an equal right
to a share in the company’s assets and profits. The
share’s quota value is 1. At year-end, there were
200,000 warrants with an equivalent number of shares.
With fully subscribed shares, the dilution effect is 1.6%
and the total number of shares would then amount to
12,521,757. On 31 December 2005, Cybercom held
170,000 warrants.
Stock price trend and sales
Cybercom’s share was listed on the Stockholm stock
exchange’s O list on 1 December 1999. A round lot
consists of 500 shares. During 2005, the Cybercom
share price rose 34.0%, while the Stockholm stock
exchange’s SX-IT index, which includes Cybercom’s
share, rose 32.1%, and the Stockholm stock
exchange’s general SX All-Share index rose 32.6%.
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PARENT COMPANY
The parent company’s operation mainly consists of
managing Group-wide functions such as finance,
communications and marketing, human relations,
administration and internal systems. At year-end
2005, there were 21 (25) employees in the parent company. The average number of employees during 2005
was 19 (18).
In 2005, sales amounted to SEK 34.8 million
(29.0). Operating loss stood at SEK 3.4 million (-6.2).
Profit after net financial items was SEK 2.9 million
(-0.8). The parent company’s liquidity amounted to
SEK 37.0 million (17.8) on 31 December 2005.
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DIRECTORS’ REPORT
At year-end, Cybercom’s share price was
SEK 40.20. The share’s high stood at SEK 42.90 and
the low, at SEK 28.10. At year-end 2005, Cybercom’s
market capitalization was SEK 495 million. During
2005, 11,717,377 Cybercom shares were traded on
the Stockholm stock exchange at a value of SEK 404
million, which corresponds to 95% of Cybercom
shares. On average, 46,313 shares per day were
traded, which is equivalent to SEK 1.6 million per
stock exchange day.
Distribution of shares 31 December 2005
Shareholders
At year end, there were 4,691 registered shareholders
(5,301), of which 72% (73) of these shareholders
owned 500 shares or fewer. Swedish institutional
shareholders owned 50.1% (24.0), Swedish private
shareholders owned 33.1% (63.3), and company
executives owned 0.7% (0.7). Foreign shareholders
owned 16.1% (12.0), of which 14.5% were institutional and 1.6% were private shareholders. Company
founders’ sales of shares to institutional shareholders
caused the large drop in privately owned shares.
Dividend policy
The board set a goal of securing Cybercom’s continued growth. Regard must always be paid to the
Group’s investment needs and financial position
before dividend-related decisions are made. The board
proposes to the AGM that no dividend be issued for
the 2005 financial year.
Holdings,
no. of shares
No. of
shareholders
No. of shares
Holdings, (%)
3 379
612 680
4.97
501 - 1 000
625
569 672
4.62
1 001 - 5 000
560
1 382 065
11.22
5 001 - 10 000
60
454 097
3.69
10 001 - 15 000
20
253 932
2.06
15 001 - 20 000
12
217 572
1.77
20 001 -
35
8 831 739
71.68
4 691
12 321 757
100.00
1 - 500
Total
15
FINANCIAL RISK MANAGEMENT
See the Accounting and valuation policies section on
page 28 for a description of Cybercom’s financial
risks.
Largest shareholders on 31 December 2005
Name
No. of shares
Votes Votes (%)
JCE Group AB
1 715 445
1 715 445
13.9
Henriksbergs fastighets AB
1 507 100
1 507 100
12.2
Christer Ericsson
1 265 034
1 265 034
10.3
Skandia Liv
978 000
978 000
7.9
Nordea Bank
604 450
604 450
4.9
Praktikertjänst Pensionsstiftelse
300 000
300 000
2.4
Stichting Shell pensionsfond
295 580
295 580
2.4
AMF Pensions småbolagsfond
282 800
282 800
2.3
Ålandsbanken
206 300
206 300
1.7
Goldman Sachs intl LTD
200 000
200 000
1.6
Other
7 354 709
7 354 709
59.6
Total
12 321 757
12 321 757
100.0
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THE BOARD’S WORK
A separate Corporate Governance Report describes
the board’s work, remuneration, and attendance.
R&D
Cybercom has no R&D operation.
OUTLOOK
The market outlook for Cybercom’s services within
telecom and selected technologies is positive. Before
year-end 2006, the company’s financial objectives are to:
• Reach an operating margin of at least 10%.
• Reach organic growth of 10%.
• Continue the acquisition strategy to reach a sales
target of SEK 750 million.
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16
FINANCIAL PERFORMANCE SUMMARY
CYBERCOM GROUP, SEK MILLION
2005
2004
2003
2002
2001
2000
1999
476.2
–438.2
–6.2
31.8
–
31.8
6.9
–2.4
36.3
–11.8
405.3
–382.1
–8.2
15.0
–
15.0
4.5
–2.2
17.3
–6.1
309.7
–401.0*
–7.0
–98.3
–13.6
–111.9
2.6
–0.9
–110.2
–0.5
344.8
–338.6
–5.8
0.4
–12.9
–12.5
5.4
–1.1
–8.2
–1.2
396.2
–368.9
–6.2
21.1
–8.9
12.2
4.8
–5.2
11.8
–6.9
357.6
–320.6
–6.2
26.7
–6.4
20.3
3.3
–0.2
23.4
–8.5
191.9
–178.6
–3.8
9.5
–0.7
8.8
6.2
–0.5
14.5
0
24.5
11.2
–110.7
–9.4
4.9
14.9
14.5
BALANCE SHEET
Assets
Intangible assets
Property, plant, and equipment
Financial assets
Deferred tax assets
Current assets, excl. cash and cash equivalents
Cash and cash equivalents
135.8
12.2
0.4
5.2
142.6
55.5
93.8
10.7
–
11.8
108.7
47.7
69.7
10.8
–
14.4
107.3
74.1
121
9.9
0.2
3.5
70.7
111.5
83.3
11.3
0.1
2.8
91.2
120.8
75.9
11.3
5.1
0.5
89.9
111.9
9.3
10.3
1.8
–
50.0
107.3
Total assets
351.7
272.7
276.3
316.8
309.5
294.6
178.7
Equity and liabilities
Equity
Non-current liabilities
Current liabilities
238.2
10.6
102.9
180.1
5.1
87.5
149.5
15.1
111.7
231.5
15.5
69.8
223.5
6.1
79.9
195.4
20.1
79.1
137.4
0.9
40.4
Total equity and liabilities
351.7
272.7
276.3
316.8
309.5
294.6
178.7
CASH FLOW STATEMENT
Cash flow from operating activities
Cash flow from investing activities
Cash flow from financing activities
Change in cash and cash equivalents
Cash and cash equivalents at year’s start
Translation difference
23.5
–16.9
–
6.6
47.7
1.2
11.1
–41.3
4.0
–26.2
74.1
–0.2
5.2
–24.4
–16.0
–35.2
111.5
–2.2
7.0
–17.1
1.4
–8.7
120.8
–0.6
31.4
–23.4
0.9
8.9
111.9
–
28.7
–44.1
20.0
4.6
107.3
–
7.0
–13.2
107.6
101.4
5.9
–
55.5
47.7
74.1
111.5
120.8
111.9
107.3
INCOME STATEMENT
Sales
Operating expenses
Amortisation as per plan
Operating profit/loss before goodwill
Goodwill amortisation
Operating profit/loss
Financial revenue
Financial expenses
Profit/loss after financial items
Tax
Year’s profit/loss
* Including SEK 96.1 million in goodwill amortisation.
Cash and cash equivalents at year’s end
2005 and 2004 are recognised as per IFRS. Other years are recognised as per previously applied accounting policies.
Definitions
Acid test ratio
Current assets divided by current liabilities.
Asset turnover rate
Sales divided by average balance sheet
total.
Ave. no. of consultants
Average number of employed consultants
based on monthly figures and adjusted for
part time employment.
Average number of employees based on
monthly figures and adjusted for part-time
employment.
Ave. no. of shares
Debt/equity ratio
Calculated as a weighted average for each Interest-bearing liabilities divided by shareyear as per the Swedish Society of Financial holders’ equity.
Analysts’ recommendations.
Earnings per share
Capital employed
Year’s profit/loss divided by average
Balance sheet total minus non-interest
number of shares.
bearing liabilities and provisions.
Earnings per share after full dilution
Capital turnover rate
Earnings per share is calculated as though
Sales divided by the average balance sheet warrants had already been exercised.
total.
EBIT
Cash flow per share
Earnings before interest and taxes (operatCurrent cash flow divided by average
ing profit/loss).
number of shares after full dilution.
EBITA
Earnings before interest, tax and amortisation of goodwill.
Employee turnover
Number of employees that terminated
employment divided by the average
number of employees for the period.
Equity/assets ratio
Shareholders’ equity as a percentage of the
balance sheet total.
Interest coverage ratio
Profit/loss after financial items plus financial expenses divided by financial expenses.
FINANCIAL PERFORMANCE SUMMARY
CYBERCOM GROUP
2005
2004
351.7
243.5
238.2
5.3
12.4
18.3
11.7
6.7
6.7
7.6
1.9
67.7
0
Neg
69.7
16.1
8.3
1.5
70.5
365
426
309
1 305
1 541
856
207.9
272.7
180.5
180.1
0.4
7.1
11.8
6.8
3.7
3.7
4.3
1.8
66.0
0
Neg
69.7
8.9
5.2
1.5
32.2
325
375
265
1 247
1 529
832
189.2
12 321 757
12 521 757
19.33
19.02
11 759 056
11 859 056
2.08
2.07
1.98
0
11 196 355
11 196 355
16.08
16.08
10 716 125
10 716 125
1.05
1.05
1.04
0
KEY FIGURES
Total capital, SEK million
Capital employed, SEK million
Equity, SEK million
Interest-bearing liabilities and provisions, SEK million
Return on total capital, %
Return on capital employed, %
Return on equity, %
Operating margin before goodwill, %
Operating margin, %
Net margin, %
Acid test ratio, times
Equity/assets ratio, %
Debt/equity ratio, times
Net debt/equity ratio, times
Share of risk-bearing capital, %
Interest-coverage ratio, times
Operating capital in relation to sales, %
Capital turnover rate, times
Investments, SEK million
No. of employees, average
No. of consultants, average
Sales per employee, SEK thousand
Sales per consultant, SEK thousand
Value added per employee, SEK thousand
Salaries and reimbursements excl. social fees, SEK million
SHARE DATA
No. of shares at year’s end
No. of shares at year’s end, full dilution
Equity per share, SEK
Equity per share with full dilution, SEK
Ave. no. of shares
Ave. no. of shares with full dilution
Profit/loss per share with full dilution, SEK
Cash flow per share with full dilution, SEK
Dividend per share
2003
276.3
149.8
149.5
0.3
Neg
Neg
Neg
Neg
Neg
Neg
1.6
54.1
0
Neg
55.9
Neg
Neg
1.0
71.3
263
375
215
1 177
1 440
3661)
154.1
10 672 468
10 672 468
14.01
14.01
9 470 197
9 470 197
–11.70
–11.70
0.55
0
17
2002
2001
2000
1999
316.8
231.8
231.5
0.3
Neg
Neg
Neg
0.1
Neg
Neg
2.7
73.1
0
Neg
74.4
Neg
0.3
1.1
54.0
289
280
236
1 193
1 461
737
167.0
309.5
223.7
223.5
0.2
5.6
8.1
2.3
5.3
3.1
3.0
2.6
72.2
0
Neg
74.1
3.3
2.9
1.3
24.5
312
300
252
1 270
1 572
742
162.4
294.6
195.4
195.4
–
10.0
14.2
9.0
7.5
5.7
6.6
2.6
66.3
0
Neg
67.4
118.0
3.0
1.5
42.2
310
285
263
1 153
1 360
722
150.7
178.7
137.4
137.4
–
13.6
21.8
19.3
5.0
4.6
7.6
3.9
76.9
0
Neg
77.4
30.0
5.0
1.7
19.3
185
270
157
1 037
1 222
755
97.0
9 251 777
9 251 777
25.02
25.02
9 169 361
9 169 361
–1.03
–1.03
0.76
0
8 757 279
9 384 553
25.52
23.82
8 696 703
8 757 279
0.56
0.65
3.34
0
8 439 803
9 417 032
23.15
20.75
8 212 315
9 198 839
1.82
1.73
3.13
0
7 882 875
8 532 875
17.43
16.10
5 991 208
6 553 708
2.42
2.21
1.07
0
1) Including one-time goodwill amortisation of SEK 96.1 million.
2005 and 2004 are recognised as per IFRS. Other years are recognised as per previously applied accounting policies.
Investments
Operating capital
Investments consist of purchased assets,
Current assets minus cash and cash equivincluding increases that result from acquisi- alents and current liabilities.
tions.
Operating expenses
Net debt/equity ratio
Operating expenses including goodwill
Net interest-bearing liabilities divided by
amortisation.
shareholders’ equity.
Operating margin
Net interest bearing liabilities
Operating profit/loss as a percentage of
Interest-bearing liabilities minus interestsales.
bearing assets.
Return on capital employed
Net margin
Profit/loss after financial items plus finanProfit/loss after financial items as a percial expenses as a percentage of the avercentage of sales.
age capital employed.
Number of employees at period’s end
Number of persons with an employment
contract on the last day of the period.
Return on shareholders’ equity
Year’s profit/loss as a percentage of average shareholders’ equity.
Return on total capital
Profit/loss after financial items plus financial expenses as a percentage of the average balance sheet total.
Sales per employee/consultant
The period’s sales divided by the average
number of employees/consultants.
Share of risk-bearing capital
Shareholders’ equity plus deferred tax
(including minority) as a percentage of the
balance sheet total.
Equity
Shareholders’ equity includes 72% of the
untaxed reserves.
Shareholders’ equity per share
Shareholders’ equity divided by the
number of shares at the period’s end.
Turnkey projects
Outsourcing and application management
(AM) projects in which Cybercom has management and staffing responsibilities.
Value added per employee
Operating profit/loss plus labour costs
divided by the average number of employees. Labour costs are salary expenses and
reimbursements plus a standard 35% for
social security costs.
18
CONSOLIDATED INCOME STATEMENT
Consolidated income statement
SEK thousand
NOTE
Net sales
1, 32
Capitalised staff costs for internal work
Other operating revenue
Other external expenses
Employee benefits
2005
471 534
2004
405 131
2 636
–
4
2 063
155
3, 5, 32
–143 468
–123 794
2, 23, 32
–294 494
–258 092
10, 11
–6 224
–8 169
4
–242
–242
31 805
14 989
Depreciation, amortisation, and impairment of
property, plant and equipment and intangible assets
Other operating expenses
Operating profit
Financial revenue
7
6 929
4 501
Financial expenses
8
–2 449
–2 178
36 285
17 312
–11 794
–6 081
24 491
11 231
Profit after financial items
Tax
Year’s profit
9
Share data
2005
2004
Before dilution
Profit/share, SEK
2.08
1.05
Equity/share, SEK
19.33
16.08
11 196 355
10 672 468
No. of shares at year’s start
New issue
1 125 402
523 887
12 321 757
11 196 355
Ave. no. of shares
11 759 056
10 716 125
2.07
1.05
After dilution
Profit/share, SEK
Equity/share, SEK
19.02
16.08
12 521 757
11 196 355
Ave. no. of shares
11 859 056
10 716 125
CONSOLIDATED CASH FLOW STATEMENT
19
Consolidated cash flow statement
SEK thousand
NOTE
2005
2004
Operating activities
Profit after financial items
25
36 285
17 312
Adjustments for items not included in cash flow
26
3 914
–1 292
40 199
16 020
Income tax paid
–1 366
6 283
before change in working capital
38 833
22 303
–13 270
–10 680
2 298
5 012
Increase/decrease accounts receivable
Increase/decrease other current receivables
Increase/decrease accounts payable
Increase/decrease other current operating liabilities
–5 246
3 302
901
–8 812
23 516
11 125
–6 603
Investing activities
Investments in intangible assets
27
–4 712
Investments in property, plant, and equipment
27
–6 263
–5 621
Acquisitions of subsidiaries
28
–18 689
–31 161
Sales of subsidiaries
29
45
23
Divestment of assets and liabilities
30
12 700
–
–
2 070
–16 919
–41 292
New issue
–
3 992
–
3 992
Decrease in current financial investments
Financing activities
31
6 597
–26 175
47 721
74 120
1 135
–224
55 453
47 721
20
CONSOLIDATED BALANCE SHEET
Consolidated balance sheet
SEK thousand
NOTE
2005
2004
ASSETS
Non-current assets
Goodwill
10
129 841
81 421
Other intangible assets
10
5 917
12 386
11
12 247
10 744
Financial assets
12
358
–
Deferred tax asset
19
5 199
11 760
153 562
116 311
95 764
70 063
4 869
3 968
29 491
Total non-current assets
Current assets
Accounts receivable
13
Income tax recoverable
Other receivables
14
35 246
Prepaid expenses
15
6 783
5 162
31
55 453
47 721
Total current assets
198 115
156 405
TOTAL ASSETS
351 677
272 716
SEK thousand
NOTE
2005
2004
EQUITY AND LIABILITIES
Equity
17
Share capital
Other capital contributions
Other reserves
12 322
11 196
276 684
245 275
–2 471
–4 153
Balanced loss
–48 354
–72 226
Total equity
238 181
180 092
Tax provisions
19
7 091
4 760
Restructuring allocations
20
–
–
Other non-current liabilities
21
Total non-current liabilities
3 543
377
10 634
5 137
8 828
3 887
Current liabilities
Advances from customers
Accounts payable
21 443
21 390
Other current liabilities
22
25 290
22 326
Accrued expenses and prepaid revenue
23
47 301
39 884
Total current liabilities
102 862
87 487
TOTAL EQUITY AND LIABILITIES
351 677
272 716
The Group’s contingencies and pledged assets
24
CHANGE IN EQUITY – GROUP
21
Change in equity – group
SEK thousand
Share
capital
Other capital
contributions
Other
reserves
Balanced
profit/loss
Equity
total
Balance at year’s start, 1 January 2004
149 480
9 452
227 258
–3 773
–83 457
Change in translation difference
–
–
–380
–
–380
Year’s profit
–
–
–
11 231
11 231
New issues
1 744
18 017
–
–
19 761
Balance at year’s end, 31 December 2004
11 196
245 275
–4 153
–72 226
180 092
Adjusted due to changed accounting policy
–
–
–
–619
–619
–179 473
Adjusted balance at year’s start, 1 January 2005
11 196
245 275
–4 153
–72 845
Change in translation difference
–
–
1 682
–
1 682
Year’s profit
–
–
–
24 491
24 491
New issues
1 126
31 409
–
–
32 535
12 322
276 684
–2 471
–48 354
238 181
Dividend per share
As per Cybercom’s dividend policy, for which the goal is to secure Cybercom’s continued growth, the board proposes that no
dividends be distributed for the 2005 financial year. No dividends were distributed for the 2004 financial year.
IFRS transition effects
Effect on equity, 31 Dec 2004 and 1 Jan 2005
SEK thousand
Equity on 31 December 2004 as per previous policy
173 210
Cancellation of goodwill amortisation
6 882
Equity, 31 December 2004 as per IFRS
180 092
Effect of IAS 39 implementation, 1 January 2005
–619
Equity, 1 January 2005 as per IFRS
Profit/loss effect full-year 2004
179 473
SEK thousand
Year’s profit in 2004 as per previous policy
4 349
Cancellation of goodwill amortisation
6 275
Cancellation of amortisation goodwill arising from assets transfer
Tax effect above
Year’s profit, 2004 as per IFRS
843
–236
11 231
Profit per share, Jan-Dec 2004 as per previous policy, SEK
0.41
Profit per share, Jan-Dec 2004 as per IFRS, SEK
1.05
See the Changed accounting policies in the Group section under the Accounting and valuation policies heading – for a
description of IFRS transition effects.
22
PARENT COMPANY
Cash flow statement – parent company
Income statement – parent company
Prepared as per the Swedish Annual Accounts Act.
SEK thousand
SEK thousand
NOTE
2005
2004
Operating revenue
Net sales
Operating revenue
1, 32
4
34 557
266
34 823
28 984
822
29 806
–20 453
–16 754
–18 793
–16 637
–905
–107
–38 219
–613
–7
–36 050
–3 396
–6 244
4 449
2 321
–448
6 322
3 516
3 792
–1 891
5 417
2 926
–827
–952
307
2 281
–
470
–357
Operating expense
Other external expenses
3, 5, 32
Staff costs
2, 23, 32
Depreciation, amortisation and impairment of
property, plant, and equipment and intangible assets 10, 11
4
Operating expense
Operating loss
Profit/loss from financial items
Profit from shares in Group companies
Interest revenue and similar income items
Interest expenses and similar expense items
Profit from financial items
6
7
8
Allocations
Tax on year’s profit/loss
18
9
Operating activities
Adjusted for items not included in cash flow
NOTE
2005
2004
25
26
2 926
1 870
4 796
–827
1 760
933
–309
–261
Income tax paid
before change in working capital
Increase/decrease accounts receivable
Increase/decrease other current receivables
Increase/decrease accounts payable
Increase/decrease other current operating liabilities
Investing activities
Investments in intangible assets
Investments in property, plant, and equipment
27
27
28
4 487
672
–236
38 594
3 077
–2 805
43 117
1 280
–27 230
–2 253
–20 869
–48 400
–1 655
–2 847
–19 323
–23 825
–
–517
–1 727
–2 244
–
–
–
–
19 292
17 754
37 046
–50 644
68 398
17 754
Financing activities
New issue
31
Balance sheet – parent company
SEK thousand
NOTE
2005
2004
SEK thousand
NOTE
ASSETS
EQUITY AND LIABILITIES
Non-current assets
Intangible assets
License rights
10
1 655
–
Equipment
11
2 814
970
Equity
Restricted equity
Share capital
Share premium reserve
Reserve fund
Total restricted equity
Financial assets
Shares in Group companies
12
177 280
123 579
19
557
182 306
1 747
126 296
Deferred tax asset
Total non-current assets
Current assets
Current receivables
Accounts receivable
Receivables from Group companies
Income tax recoverable
Other receivables
Prepaid expenses
Total current receivables
Current investments
Other current investments
Cash and bank deposits
Total current assets
TOTAL ASSETS
13
236
56 892
306
25
2 633
60 092
–
89 380
314
59
650
90 403
16
–
9 960
31
37 046
97 138
7 794
108 157
279 444
234 453
14
15
2005
2004
12 322
–
178 962
191 284
11 196
248 271
1 698
261 165
5 800
2 281
8 081
–102 059
–357
–102 416
17
Non-restricted equity
Balanced profit/loss
Total non-restricted equity
Total equity
199 365
158 749
Untaxed reserves
18
8 611
7 659
Other non-current liabilities
21
325
240
22
23
4 403
57 615
3 877
5 248
71 143
1 326
57 250
3 162
6 067
67 805
279 444
234 453
None
None
None
None
Current liabilities
Accounts payable
Liabilities to Group companies
Accrued expenses and prepaid revenue
Total current liabilities
TOTAL EQUITY AND LIABILITIES
Pledged assets
Contingent liabilities
Change in equity – parent company
Balance at year’s start, 1 January 2004
New issues
Received/paid Group contribution
Tax consequences, received/paid Group contribution
Year’s loss
Appropriation of profit/loss
New issues
Received/paid Group contribution
Tax consequences, received/paid Group contribution
Adjustments between non- and restricted equity
Reversal of share premium reserve to reserve fund
Year’s profit
Share
capital
Share premium
reserve
Ongoing
new issue
Reserve
fund
Non-restricted
capital
Total
equity
9 452
1 744
–
–
–
11 196
–
1 126
–
–
–
–
–
12 322
201 898
46 373
–
–
–
248 271
–103 694
31 409
–
–
1 278
–177 264
–
–
28 356
–28 356
–
–
–
–
–
–
–
–
–
–
–
–
1 698
–
–
–
–
1 698
–
–
–
–
–
177 264
–
178 962
–106 672
–
6 406
–1 793
–357
–102 416
103 694
–
8 055
–2 255
–1 278
–
2 281
8 081
134 732
19 761
6 406
–1 793
–357
158 749
–
32 535
8 055
–2 255
–
–
2 281
199 365
ACCOUNTING AND VALUATION POLICIES
23
The consolidated financial statement was prepared as
per Swedish law and the International Financial
Reporting Standards (IFRS), published by the
International Accounting Standards Board (IASB),
and interpretive statements from the International
Financial Interpretations Committee (IFRIC), which
was approved by the European Community Commission for application within the European Union as of
31 December 2005. Standards and interpretations
published after this date have not been implemented.
This financial report is the first complete financial
report prepared as per IFRS. In connection with the
transition from previously implemented accounting
policies to accounting as per IFRS, the Group has
implemented IFRS 1, which is the standard that
describes how the IFRS transition must be recognised.
The Swedish Financial Accounting Standards
Council’s recommendation RR 30 (Additional
accounting rules for group companies) was also implemented. The section on Changed accounting policies
in the Group presents a summary with explanations of
how the IFRS transition affected the Group’s financial
profit/loss and position and recognised cash flow.
The parent company’s annual report is prepared as
per Swedish law and applies the Swedish Financial
Accounting Standards Council’s recommendation
RR 32 for legal entities and the Emerging Issues Task
Force’s pronouncements. So IFRS valuation and
disclosure rules are implemented, with any exceptions
stated in the Changed accounting policies in the
parent company section.
The parent company’s functional currency is the
Swedish crown, and it is also the presentation currency
for the parent company and Group. So financial presentations are in Swedish crowns, rounded to the nearest
thousand unless otherwise specified.
Important estimates and assessments
To prepare the financial reports, as per IFRS, requires
that management and the board make assessments and
assumptions that affect application of accounting
policies and recognised amounts of assets, liabilities,
revenue and expenses, along with other submitted
information. These assessments and assumptions are
based on historical experiences and several other
factors that management and the board determine to be
probable under the prevailing circumstances. Resulting
conclusions form the basis for decisions on recognised
value of assets and liabilities that other sources would
not otherwise reveal. The actual outcome can differ
from these estimates and assessments.
Management-made assessments, when implementing IFRS, can have a key impact on the financial
presentations, and any estimates made can lead to
substantial adjustments to the following year’s financial
presentations. These assessments can have a significant
effect on the Group’s profit/loss and financial position,
especially within revenue recognition and bad debts,
measurement of intangible and other non-current
assets, as well as taxes. See the applicable note.
Changed accounting policies in the Group
For the Group, the IFRS transition was recognised as
per IFRS 1. As per the IFRS 1 optional exemption, IAS
39, IFRS 4, and IFRS 5 were not applied to comparison figures for 2004. They were only applied forward
from 1 January 2005.
IAS 39 implementation affected equity by
SEK –619 thousand as per 1 January 2005. In 2005,
the effect of IAS 39 on the income statement’s
financial items was SEK 1,531 thousand.
IFRS 3 implementation led to a change in accounting policy, because goodwill amortisation was discontinued. Goodwill amortisation of SEK 6,275 thousand
for 2004 and goodwill amortisation arising from an
assets transfer of SEK 843 thousand – minus the SEK
236 thousand tax effect – was reversed to the income
statement. Accumulated goodwill amortisation on
31 December 2003 was eliminated through an
equivalent reduction in acquisition cost of goodwill.
The recognised value of goodwill is re-examined each
year or more often if there are circumstances that
indicate a decrease in value. There is no need for
impairment charge.
The IFRS transition increased the profit per share
from SEK 0.41 to SEK 1.05. Equity per share rose
from SEK 15.47 to SEK 16.08.
The IFRS transition also changed the manner in
which equity is presented on the balance sheet. In
previous accounting policies, equity was either
restricted or non-restricted. As per IAS 1, equity is
divided into the represented subcomponents. The
parent company’s registered share capital is included
in the Share capital item. All transactions the parent
24
company has with the shareholders are included in the
Other capital contributions item, which consists of
premium issues. The amount presented corresponds to the
capital received above and beyond the nominal amount of
the issue. In Cybercom’s case, Reserves consist of translation differences pertaining to foreign subsidiaries as per
IAS 21. The Balanced profit/loss item is equivalent to the
accumulated profit/loss generated in the Group.
The IFRS did not affect the Group’s recognised cash flow.
Changed accounting policies in parent company
Recognition as per IAS 39 is not mandatory for legal
entities in 2005, and the company chose not to implement
IAS 39 in the parent company for 2005, so the company’s
accounting policies were not changed due to the IFRS
transition.
In 2004, the parent company received a Group contribution of SEK 4,564 thousand from the Cybercom CGSIT AB
subsidiary. In 2005, this was reclassified as a dividend for
tax purposes. As a result, comparison figures for 2004
changed for the parent company. Profit rose by the equivalent amount of SEK 4,564 thousand, and equity increased
with a tax effect of SEK 1,278 thousand, while deferred
prepaid tax rose by the equivalent amount.
Consolidated accounts
The parent company and its subsidiaries are included in
the consolidated accounts. The financial reports for the
parent company and subsidiaries included in the consolidated accounts cover the same period and are prepared as
per the accounting policies that pertain to the Group. All
internal Group balances, revenue, expenses, profits or
losses that arise in transactions between companies that
are included in the consolidated accounts are entirely
eliminated.
A subsidiary is included in the consolidated accounts
from the date of acquisition, which is the day the parent
company takes control, to the date that control is terminated.
Acquired subsidiaries are included in the consolidated
accounts as per the acquisition method. Consequently,
acquisition cost is divided into acquired assets, assumed
commitments, and liabilities on the date of acquisition –
based on their actual value.
Netcom Consultants AB was acquired on 1 May 2005,
so its profit/loss and cash flow for the eight-month period
May to December 2005 is included in the consolidated
accounts.
When a subsidiary is sold during the year, profit/loss is
included for the ownership period, and its income and
expenses are recognised in the consolidated income
statement. Capital gains and losses are calculated within
the Group as the difference between the selling price and
the consolidated value of the subsidiary’s net assets.
When converting income statements and balance sheets
of foreign subsidiaries, all subsidiaries’ assets and liabilities are converted using the closing day rate, while income
statements are converted using the average exchange rate.
Shareholders’ equity was converted at the historical rate.
Conversion differences had no impact on profit or loss –
they are booked directly to shareholders’ equity.
Segment reporting
Business segments contain products or services that are
subject to risks and returns that differ from other business
segments. Geographic markets offer products or services
within a specific economic environment that are subject to
risks and returns, which differ from the risks and returns
that apply to units operating in other economic environments. The Group’s segments are divided according to the
geographic market they operate in, so there is now only
one segment in the Group: geographic markets.
As of 1 January 2005, the Group’s business divisions
went from three to two: Sweden and International.
Comparative figures for business segments in this annual
report were converted.
Revenue recognition
The Group’s revenue primarily comes from consulting
services, which account for 98% of sales. Software sales
make up 1%, and other revenue makes up 1% of Group
sales. Revenue consists of the actual value of sold goods
and services excluding VAT, and after elimination of
internal Group sales.
Revenue is recognised as:
Service assignments on running accounts
Running account assignments are recognised as profit/loss
at the rate that the assignments are performed, i.e.,
revenues and expenses are recognised for the period in
which they were earned or incurred. Non-invoiced revenue
earned on the closing day is recognised as accrued income
under the heading for other receivables.
Fixed price services
If a fixed price service assignment outcome can be reliably
estimated, then the assignment’s revenue and expenses are
recognised as revenue and expenses, respectively, regarding
the assignment’s degree of completion on the closing day
(the percentage of completion method). The number of
utilised hours on the closing day, in relation to the assignment’s estimated total, mainly determines percentage of
completion.
If estimation difficulties occur (e.g., a project is in an
early phase) and if the customer will cover accrued
expenses, then income is recognised on the closing day at an
amount that corresponds to the assignment’s accrued
expenses, so no profit is recognised.
If an assignment’s profit and loss cannot be reliably
estimated, then only anticipated customer-defrayed
expenses are reported as income. If the customer probably
will not pay the accrued expenses, then no income is
reported and accrued expenses are recognised as costs.
Suspected loss is booked immediately as an expense, in as
much as it can be estimated.
Assignments performed on a fixed-price basis currently
represent 40% (42) of Group sales. Fees on fixed-price
assignment invoices, for services not yet performed, are
recognised as advances from customers.
Borrowing costs
The Group is financed by own means and has no debts to
credit institutes. If debt is incurred, borrowing costs
burden profit/loss for the period they relate to.
Recognition of allocations and untaxed reserves
Tax legislation in Sweden and some other countries allows
for deferment of tax payments through allocation of
untaxed reserves in the balance sheet via the income
statement’s allocations item. The consolidated accounts do
not include appropriations and untaxed reserves. After
elimination, the untaxed reserves are split into deferred tax
liabilities and balanced profit/loss. Deferred tax on untaxed
reserves is estimated without discounting, based on the
actual tax expense for the next year. For 2005, 28% of the
untaxed reserves relate to deferred tax and 72% to shareholder’s equity.
Intangible assets
Intangible assets are included in the balance sheet at
acquisition cost with deductions for estimated residual
value (normally 0) and for scheduled, accumulated
amortisation and possible write-downs. Scheduled
amortisation is based on acquisition cost of non-current
assets. Amortisation is linear and based on the economic
lifespan of the assets.
These amortisation periods were applied:
License rights
Goodwill (up to 2003)
Capitalised software development expenses
Acquired trademarks
Patents
25
4-5 years
5-10 years
3 years
10 years
5 years
License rights
Acquired software licenses are capitalised on the basis of
the expenses incurred when the software application was
acquired and put into use. These expenses are amortised
during the estimated economic lifespan.
Goodwill
Goodwill represents the amount with which the acquisition cost exceeds actual value of the Group’s share of the
acquired subsidiary’s net assets upon acquisition. Goodwill on acquisition of subsidiaries is recognised as an intangible non-current asset. Goodwill that arises from
acquisition of a foreign operation is converted to the
closing day rate, and the translation difference is recognised in equity. Goodwill is tested annually (or when there
are signs of decline) to identify possible write-down
requirements. Goodwill is recognised as acquisition cost
less accumulated write-downs. Goodwill amortisation was
discontinued on 31 December 2003.
Capitalised software development expenses
Ordinarily, expenses for software development and
maintenance are booked immediately, but expenses
directly related to identifiable, unique software products
that the Group controls and that probably provide
financial benefit that exceeds cost after one year are
capitalised as intangible assets. Direct costs include staff
expenses for program development personnel and a
reasonable share of relevant indirect costs. Expenses that
increase performance or extend the software’s lifespan
beyond its original level are recognised as improvement
expenses, which increase the original acquisition cost.
Development was financed with the Group’s own assets, so
no interest was capitalised.
There were no expenses for development, and no
research is done within the Group.
Acquired trademarks
A comparison, using an internal trademark valuation,
determined acquisition cost for acquired trademarks,
which are amortised during the estimated economic
lifespan of ten years.
26
Patents
Acquisition cost for patents is based on the cost of patent
registration. Patents are amortised over a period of five
years.
Equipment is included in the balance sheet at acquisition cost
with deductions for scheduled, accumulated depreciation and
any impairment. Scheduled depreciation is based on the
acquisition cost of the non-current assets. Depreciation
occurs based on the economic lifespan of the assets.
This depreciation period was applied:
Computers and other equipment
3-5 years
Income taxes
Reported income tax comprises tax that will be paid or
received for the current year, adjustments to the previous
year’s actual tax, and changes in deferred tax.
A valuation of all tax liabilities/prepaid tax is calculated at
a nominal amount as per tax regulations and established tax
rates or proposed tax rates that will probably be adopted.
The balance sheet method was used to calculate deferred
tax on all temporary differences that arose between the
recognised and fiscal values of assets and liabilities. The
temporary differences primarily arose through changes in
untaxed reserves and fiscal deficits.
Deferred tax claims regarding tax deficits or other fiscal
deductions are recognised to the extent that it is probable that
the deduction can be applied against future tax surpluses.
Please see supplementary information in note 19.
The parent company reports deferred tax on untaxed
reserves as part of the untaxed reserves because of the
connection between accounting and taxation.
Determining (1) current tax liabilities and prepaid taxes
and (2) reserves for deferred tax liability and deferred prepaid
taxes – particularly valuation of deferred prepaid taxes –
requires considerable management assessment. This process
includes determining the tax allocation in each of the
jurisdictions where the Group has operations. It also includes
estimating exposure to current taxes and determining the
temporary differences that occur due to certain assets and
liabilities being valued differently in the accounting records
and income tax return. Management must also estimate the
likelihood of realising deferred tax assets through future
taxable revenue. The actual outcome could differ from these
estimates due to (1) future changes in the business climate,
changes in tax legislation as yet currently unknown or (2) the
tax authority’s or courts’ final audit of submitted returns.
Provisions
Obligations are recognised as provisions if they are
attributable to this financial year or earlier financial years,
and if on the closing day, they are certain or likely to occur
but are uncertain in terms of amount or when they will be
fulfilled. Provisions are recognised as current or noncurrent – depending on due date.
Impairment
When there is an indication that the value of an asset has
diminished, an evaluation of the asset’s recognised value
occurs. In those cases when an asset’s recognised value
exceeds its calculated recovery value, the asset is immediately depreciated to its recovery value. An evaluation of
cash-generating units was done as per IAS 36 (impairment
of assets). Upon calculation of the remaining lifespan for
goodwill or shares in subsidiaries, a 14.5% cost-of-capital
rate was applied.
Receivables
Receivables are valued individually and requisite allowances are made.
Receivables and liabilities in foreign currency
Current receivables and liabilities were converted using the
closing day rate. Exchange rate differences for receivables
and liabilities are recognised in the income statement
under financial items, while other exchange rate differences are under operating profit/loss and recognised under
the other operating revenue or other operating expenses
headings. For a description of currency risk management,
please see the Financial risk section.
Current investments
Current investments are recognised at market value on the
balance sheet day.
Leasing contracts
All leasing contracts are based on individual evaluations
and recognised as operational leasing agreements. The
lessor and/or the lessee make the decision for the classification of leasing contracts based on the scope of economic
risks and benefits that are associated with ownership of the
leased object. To guarantee this, individual examinations
of all contracts are done during the year. In 2005, there
were only the usual operational leasing contracts, such as
for renting premises and copy machines. Payments made
during the lease term are written off in the income
statement linearly over the term of the lease. No significant
leasing contracts were entered into during the year.
Group contributions
Cybercom follows the Financial Accounting Standards
Council’s Emerging Issues Task Force’s statement on
recognition of Group contributions, so recognition of
Group contributions is based on the contributions’ financial
implications and consequences. Group contributions paid
and received, to minimise the Group’s tax, are recognised as
a decrease or an increase in unrestricted equity.
Cash flow statement
The indirect method is used to develop the cash flow
statement. Recognised cash flow covers only transactions
that lead to incoming or outgoing payments. Besides cash
and bank balances, liquid assets include short-term
financial investments that (1) are exposed to only an
insignificant risk of value fluctuations and (2) are traded in
an open market in which amounts are known or (3) have a
term shorter than three months from time of acquisition.
Financial instruments
The Group classifies financial instruments in these
categories: (1) financial assets assessed at fair value via the
income statement and (2) financial assets available for sale
and accounts receivable. Presentation (classification)
depends on the purpose for which the instrument was
acquired. Management determines the presentation
(classification) of the instrument at the first accounting and
re-examines this decision at each presentation opportunity.
Financial assets assessed at fair value via the income
statement
Includes two subcategories: (1) financial assets held for trade
and (2) financial assets that are initially assigned to the
assessed-at-fair-value category via the income statement. A
financial asset is classified in this category if it is acquired
mainly to be sold rather soon or if management determines
this classification. Derivative instruments are also categorised
as trade holdings if they are not identified as hedges. Assets in
this category are classified as current assets if they are held for
trade or are expected to be sold within 12 months from the
balance sheet day. As per the transition rules, earlier periods
need not be recalculated. Instead, the application effect of IAS
39 is recognised directly in initial equity. Due to this, equity
was reduced by SEK 619 thousand as per 1 January 2005 for
currency forward contracts held. Conversion to fair value is
recognised further in the income statement among the
financial items. Derivative instruments are included in current
assets and recognised in the other receivables item on the
balance sheet.
27
Financial assets available for sale
Financial assets available for sale are non-derivative assets
that have either been assigned to this category or not
classified in any other category. They are included in noncurrent assets if management does not intend to sell the asset
within 12 months after the balance sheet day.
Accounts receivable
Accounts receivable are non-derivative financial assets with
fixed or ascertainable payments that are not listed on an
active market. Characteristically, they arise when the Group
provides goods or services directly to a customer without
intending to trade with the accrued receivable. They are
included in current assets and recognised in the accounts
receivable item in the balance sheet.
Purchases and sales of financial instruments are recognised on the trade date, i.e., the date the Group agrees to buy
or sell the asset. Financial instruments are initially assessed at
fair value plus transaction charges, which apply to all
financial assets that are not assessed at fair value via the
income statement. Financial instruments are removed from
the balance sheet when the right to secure cash flow from the
instrument has expired or been carried forward, and the
Group has carried forward most of the risks and advantages
associated with ownership. Financial assets assessed at fair
value via the income statement and financial assets available
for sale are recognised after the acquisition date at fair value.
Accounts receivable are recognised at amortised cost when
applying the effective interest method. Realised and unrealised gains and losses due to changes in fair value for nonmonetary instruments classified as instruments available for
sale are recognised in equity. When instruments classified as
instruments available for sale are sold or when impairment
losses exist for them, accumulated adjustments to fair value
are carried over to the income statement as revenue from
financial instruments.
The fair value for listed investments is based on current
bid rates. If the market for a certain financial asset is not
active (and for unlisted securities), the Group determines the
fair value by applying a valuation technique, such as using
information regarding newly made transactions in a similar
context. Other valuation techniques that could be used are
analysis of discounted cash flows and option valuation
models that were refined to reflect the issuer’s special
circumstances.
The Group determines on each balance sheet day whether
there’s objective evidence that impairment loss exists for a
financial asset or group of financial assets.
28
Employee benefits
Pension obligations
The Group only has defined contribution pension plans for
which the Group pays fixed fees to publicly or privately
administered pension insurance plans on a mandatory,
contractual or voluntary basis. The Group has no further
payment obligations after the fees are paid. The fees are
recognised as staff costs when they are due. Prepaid fees
are recognised as an asset in so far as cash reimbursement
or reduction of future payments is in the Group’s favour.
Other benefits after employment termination
The Group offers no benefits after termination of employment.
Benefits compensation
Benefits compensation ceases when an employee is terminated before normal pension age or when an employee
accepts voluntary termination in exchange for such
reimbursements. The Group recognises severance pay when
it is unquestionably obligated either to (1) terminate
employees as per a detailed formal plan without possibility
of revocation or to (2) grant compensation at termination
due to an offer made to encourage voluntary employment
termination.
Profit-sharing and bonus plans
The Group recognises a liability and a cost for bonuses
and profit sharing based on a formula that accounts for
profit related to the parent company’s shareholders after
certain adjustments. The Group recognises an allocation
when there’s a legal or informal liability due to previous
practices.
Financial risks
Through its operation, the Group is exposed to various
financial risks, including effects of changes in exchange
rates and interest rates. The board establishes written
principles for overall management of risks and for specific
areas, such as currency risks, interest risks, credit risks,
and use of derivative instruments and placement of extra
liquidity. The policy is subject to frequent revision but is
revised at least once a year.
Currency
Sales in the foreign subsidiaries in Denmark, Norway,
Singapore, and the UK amount to about 15% of the
Group’s total sales. The subsidiaries’ net assets are exposed
to currency conversion risks, directly in Danish crowns and
British pounds and indirectly in Norwegian crowns and
Singapore dollars. Receivables and cash and cash equivalents can be partially in Swedish currency and partially in
foreign. Foreign currency is valued at the closing day rate as
per stated accounting policies. Receivables are valued
individually and requisite allowances are made. For
managing larger exposures to fluctuation risks in foreign
currency exchange rates, derivative instruments are used.
Interest
The Group’s income and cash flow from operations are
essentially independent of changes in the market’s interest
rates. The Group has interest-bearing assets in the form of
bank securities.
Credits
The Group had no liabilities to credit institutions at the
end of the accounting period.
Caution is used when managing liquidity risks, which
involves maintaining sufficient cash and cash equivalents
and saleable securities. Any excess liquidity is placed in
risk-free, interest-bearing funds.
Expenses
Staff cost is the largest cost item and represents about 64%
of total expenses.
This summary shows the effect on operating profit/loss
of a 1% change in certain factors, calculated on the 2005
outcome:
+/– 1%
SEK million
Price to customer
3.8
Capacity utilisation
2.5
No. of consultants
0.6
Staff costs
2.8
Recognised effects should be seen independently of each
other and presume that other factors have not changed.
NOTES
29
Notes
1
SEGMENT REPORTING
Primary segment – business divisions
2005 FINANCIAL YEAR
SWEDEN
INTERNATIONAL
External sales
419 264
52 302
Internal sales
2 951
20 473
–
–
422 215
OTHER
ELIMINATION
GROUP
2 031
–
473 597
34 421
–57 845
0
2 636
–
2 636
72 775
39 088
–57 845
476 233
27 565
5 152
–912
–
31 805
Assets excl. goodwill
181 141
53 896
122 126
–140 526
216 637
Goodwill
115 251
14 590
–
–
129 841
Total assets
296 392
68 486
122 126
–140 526
351 677
Liabilities
130 465
20 081
89 265
–141 535
98 276
130 465
20 081
89 265
–141 535
113 496
Investments
51 558
11 537
7 384
–
70 479
Depreciation
–2 972
–1 395
–1 857
–
–6 224
–583
–806
4 907
–1 208
2 310
SWEDEN
INTERNATIONAL
OTHER
ELIMINATION
GROUP
405 286
Revenue
Capitalised staff costs for internal work
Operating revenue
Other disclosures
Non-allocated assets
5 199
Non-allocated liabilities
Total liabilities
15 220
Expenses, exceeding depreciation,
not corresponding to payments
2004 FINANCIAL YEAR
Revenue
External sales
351 015
49 051
5 220
–
Internal sales
3 741
19 460
28 160
–51 361
0
354 756
68 511
33 380
–51 361
405 286
21 207
1 796
–8 819
805
14 989
156 763
44 001
110 309
–131 538
179 535
77 728
3 693
–
–
81 421
Total assets
234 491
47 694
110 309
–131 538
272 716
Liabilities
133 831
13 891
65 728
–130 749
82 701
133 831
13 891
65 728
–130 749
92 624
Operating revenue
Other disclosures
Assets excl. goodwill
Goodwill
Non-allocated assets
11 760
Non-allocated liabilities
Total liabilities
9 923
Investments
20 977
4 529
6 729
–
32 235
Depreciation
–3 066
–1 376
–3 727
–
–8 169
3 157
–163
6 467
–
9 461
Expenses, exceeding depreciation,
not corresponding to payments
During 2005, the Group was organised into two main business divisions.
The Sweden division focuses on telecom and selected technologies for ecommerce and billing, portals and mobile solutions, and embedded systems
in Sweden. International operations were gathered in the International
business division. It consists of subsidiaries in Denmark, Norway, and the
UK. The Other column refers mainly to the parent company’s activities and
the sold CyberMate PreHospital operation.
Business segment assets mainly consist of property, plant, and equipment, intangible non-current assets and receivables.
Business segment liabilities consist of operating liabilities, excluding tax
liabilities.
Investments consist of property, plant, and equipment and intangible
asset purchases, including increases resulting from acquisitions.
Non-allocated assets and liabilities consist of deferred prepaid tax, deferred tax liability, tax liabilities, and liabilities related to company acquisitions.
Internal deliveries affected revenue, expenses, and profit/loss for the business divisions. Internal rates are market based.
30
NOTES
2
GROUP
SALARIES, OTHER REIMBURSEMENTS AND SOCIAL COSTS
GROUP
Salaries and other reimbursements
PARENT COMPANY
Sick leave, %
PARENT COMPANY
2005
2004
2005
2004
2.6
2.6
3.4
3.9
- Long-term sick leave
1.4
1.1
1.3
0.6
- Sick leave, men
2.3
1.5
0.8
0.4
Total sick leave
2005
2004
2005
2004
16 565
21 904
4 542
3 787
- Sick leave, women
3.7
5.0
4.9
5.8
Other employees
191 359 167 345
6 771
8 017
- Employees up to age 29
1.5
2.6
1.1
0.1
Total
207 924 189 249
11 313
11 804
2.6
2.0
3.6
4.1
10.2
7.8
–
–
Board and CEO
- Employees ages 30-49
- Employees ages 50+
Social costs
Pension costs, CEO
Pension costs, other personnel
1 870
3 154
644
644
17 368
15 028
699
902
Other social costs
incl. employer’s contributions
58 087
52 705
3 960
4 198
Total
77 325
70 887
5 303
5 744
2004
OTHER
EMPLOYEES
Parent company
4 542
6 771
3 787
8 017
Subsidiaries in Sweden
7 202
144 143
12 697
117 935
11 744
150 914
16 484
125 952
2 178
21 724
3 260
16 945
Denmark
Norway
UK
Group total
891
7 404
380
10 340
11 317
1 780
14 108
16 565
191 359
21 904
167 345
NO.
Sweden
BOARD
OTHER
AND CEO EMPLOYEES
1 752
2005
NO.
OF WHICH
MEN*
311
77%
264
75%
Denmark
31
82%
28
87%
Norway
13
92%
18
89%
82%
UK
Group total
of which parent company
10
91%
15
365
78%
325
77%
19
32%
18
32%
*Percentage of men at year’s end.
Board members
and executives
2004
NO. ON RE- OF WHICH
NO. ON RE- OF WHICH
PORTING DATE
MEN PORTING DATE
MEN
Group (incl. subsidiaries)
Board members
10
80%
11
91%
CEO and
other executives
11
82%
10
70%
Board members
7
86%
8
88%
CEO and
other executives
3
33%
3
33%
Parent company
2004
2005
2004
Audit
Öhrlings PricewaterhouseCoopers
1 330
1 088
1 261
754
PricewaterhouseCoopers,
Nordic countries
83
183
–
–
Other auditing firms
83
91
–
–
321
569
304
516
24
–
–
–
1 841
1 931
1 565
1 270
Other consulting
Öhrlings PricewaterhouseCoopers
Other auditing firms
Total
4
OTHER OPERATING REVENUE AND EXPENSES
Exchange rate differences are included in operating profit/loss for operating
receivables and liabilities, as follows:
GROUP
PARENT COMPANY
2005
2004
2005
1 953
–
163
–
–242
–242
–107
–7
1 711
–242
56
–7
Total
2005
PARENT COMPANY
2005
Besides customary audits, auditing services include all necessary consultations, work related to observation of the audit or other audit-related tasks.
2004
OF WHICH
MEN*
AUDITORS’ FEES
Fees for auditing and consulting
BOARD
AND CEO
Sweden total
3
GROUP
Salaries and other reimbursements distributed per country and among
board members, employees, and others:
2005
Sick leave is only accounted for in Swedish companies.
2004
NOTES
5
9
OPERATIONAL LEASING
TAXES ON YEAR’S PROFIT/LOSS
The nominal value of future minimum leasing fees, which are related to
non-cancellable leasing contracts, are distributed according to:
GROUP
GROUP
PARENT COMPANY
2005
2004
Payable within 1 year
11 443
11 309
6 710
7 803
Payable within 1-5 years
29 322
30 079
19 824
27 025
–
–
–
–
Payable after 5 years
2005
2004
Leasing expenses and revenue related to operational leasing contracts
amount to:
Leasing expenses
Leasing revenue for
sub-leased items
12 124
11 451
348
249
4 885
5 350
Write-downs
Total
7
GROUP
–293
–
–897
–1 324
–11 794
–6 081
307
470
122
143
–7 286
–5 200
–897
–1 324
Deferred tax in the
income statement
Group
Deferred tax expenses refer to changes in opening temporary differences,
mainly for deductions regarding deficit deductions. Deferred recoverable
tax refers primarily to capital insurance provisions. See temporary differences in note 19.
2004
4 564
–1 048
4 449
3 516
2004
2 431
1 899
2 632
2 070
422
1 160
Parent company
Deferred recoverable tax refers primarily to capital insurance provisions.
Tax regarding items directly
recognised against equity
1 531
–
–
–
Total
6 929
4 501
2 321
3 792
2005
2004
2 255
1 794
Total
2 255
1 794
Difference between tax expense
in income statement and tax
expense based on current tax rate
PARENT COMPANY
2004
–17
–
–73
–134
Exchange rate differences
–2 432
–2 178
–375
–1 757
Total
–2 449
–2 178
–448
–1 891
GROUP
PARENT COMPANY
2005
2004
2005
2004
36 285
17 312
1 975
–827
–10 160
–4 847
–553
232
–473
–36
–293
–896
Tax effect from non-deductible costs –996
–542
–251
–143
267
1 465
1 277
Tax as per prior years
Tax effect from other revenue
not subject to tax liability
FINANCIAL EXPENSES
PARENT COMPANY
Tax effect from Group contributions
Tax as per current rate
Fair value model gain for
derivate instruments
Interest
–
–5 200
330
–782
2005
–471
424
3 993
2004
–896
19
1 405
2005
–
–1 467
Exchange rate differences
GROUP
–36
–1 019
Interest
8
–2
–5 530
5 231
2005
2 690
–7 710
PARENT COMPANY
2004
1 497
–7 286
Year’s deferred taxes
Total
2004
–845
Deferred recoverable tax
regarding temporary differences
FINANCIAL REVENUE
2005
Deferred taxes attributable
to prior years
2005
–4 035
Deferred tax expense
regarding temporary differences
PARENT COMPANY
Anticipated dividend
Tax attributable to prior years
2004
4 020
PROFIT/LOSS FROM SHARES IN GROUP COMPANIES
2005
Year’s tax
PARENT COMPANY
2005
Year’s deferred tax expense or recoverable tax
Rental contracts that expire during the period were estimated under similar
conditions. Leasing contracts consist mainly of rental contracts and a few
office machines.
6
31
15
Standard interest on
tax allocation reserves
–142
–
–61
–
Effect of non-incurred prepaid tax
–820
–751
–
–
782
–172
–
–
–11 794
–6 081
307
470
Effect of foreign tax rates
Taxes on year’s outcome as per
income statement
Tax rate
The Group and parent company’s tax rate amounts to 28%. The Group’s
effective tax rate amounts to 32.5% (35%). The parent company’s effective
tax rate is not applicable for 2005 (-56.8%).
32
NOTES
10
GROUP
Goodwill
INTANGIBLE NON-CURRENT ASSETS
GROUP
PARENT COMPANY
81 421
185 420
Year’s purchases
48 345
20 805
–
–124 804
2005
2004
Opening acquisition cost
1 600
1 600
–
–
Purchases
1 655
–
1 655
–
Book value
Closing accumulated
acquisition costs
3 255
1 600
1 655
–
–1 600
–1 600
–
–
–
–
–
–
–1 600
–1 600
–
–
1 655
0
1 655
–
Year’s amortisation
Closing accumulated
amortisation
Closing scheduled residual value
2004
2004
License rights
Opening amortisation
2005
2005
GROUP
Capitalised expenses for software development
Year’s capitalised expenses, internal development
Sales
Closing accumulated acquisition costs
Sales
2005
2004
16 431
10 622
2 936
5 809
–19 367
–
0
16 431
–4 045
–1 549
–568
–2 496
4 613
–
Closing accumulated amortisation
0
–4 045
0
12 386
GROUP
Trademarks
Through acquisition of subsidiaries
Sales
Sales
2005
2004
–
–
4 000
–
–
–
4 000
–
–
–
–
–
–267
–
–267
–
3 733
–
Patents
2005
2004
–
–
GROUP
Purchases
Sales
1 011
–
121
–
–
–
1 132
–
–
–
–458
–
–
–
–145
–
–603
–
529
–
Sales
Disposals
75
–
129 841
81 421
115 251
77 728
14 590
3 693
Goodwill distribution by business division
Sweden
International
Other
Total
–
–
129 841
81 421
Along with the goodwill impairment test, estimates of future cash flow, which
the assets could generate, are made. Value of future cash flow depends significantly on the applied interest rate. Assumptions and assessments that were
done with the impairment test in 2005 are described below.
When the operations’ cash flows are forecasted without accounting for
financial items, the applied interest rate for discounting cash flows reflects
the weighted capital cost for shareholders’ equity and loan financing after
tax, i.e., the weighted average cost of capital (WACC). To determine the
WACC, these factors must be estimated:
· Net debt/equity ratio (financing mix)
· Return on investment demands on shareholders’ equity
· Cost of long-term loan financing
The company decided to always finance with shareholders’ equity. The
company has few tangible assets. A comparison with other companies supports 100% financing with shareholders’ equity.
The return-demand level on shareholders’ equity is normally based on
the capital asset pricing model (CAPM); consequently, return demand is
based on risk-free interest, with addition of a risk premium.
The risk-free interest rate is equal to 10-year government bonds, about
3% (5%).
The risk premium comprises:
· General compensation for share-investment risks. This market risk premium
was estimated to be about 4%, one percentage point lower than last year.
· A weighting up or down for the current investment risk, relative to the market average. This factor was estimated to be about 1.5.
· A supplement regarding the company’s size and a specific, risk-condition
supplement. In the company’s case (besides size-related supplement), this
means, e.g., an insufficient track record that supports positive future financial trends and especially dependent relationships (primarily customers and
key people). Together, these supplements were estimated to be from about
4.5% to 6.5% (two percentage points lower than last year, based on the
company’s performance last year).
The total projected interest rate (median value in the above interval) after tax
was based on the above factors and estimated to be: 3% + 1.5 x 4% + 5.5% =
14.5%.
Considering the information above, it can be established that there is no
impairment loss.
NOTES
11
12
PROPERTY, PLANT, AND EQUIPMENT
GROUP
Equipment
Purchases
Sales and disposals
Closing accumulated
acquisition costs
Opening depreciation
Sales and disposals
Closing accumulated
depreciation
PARENT COMPANY
GROUP
2004
2005
2004
Other financial assets
2005
2004
34 022
29 501
5 546
5 046
6 263
5 621
2 879
517
–18 261
–1 042
–3 474
–17
6 148
–
–
–
603
–58
–
–
Disposals
Revaluation to fair value
182
–182
350
8
358
182
–
–
–
182
28 775
34 022
4 951
5 546
Opening write-down
Disposals
Closing accumulated write-down
–182
182
0
–182
–
–182
–23 278 –18 704
–4 576
–3 973
358
0
3 344
10
Through acquisition of subsidiaries –5 046
Year’s depreciation
FINANCIAL ASSETS
2005
17 428
791
–
–
–
–5 244
–5 674
–905
–613
–388
309
–
–
–16 528 –23 278
–2 137
–4 576
2 814
970
12 247
10 744
Fair value
PARENT COMPANY
Shares in Group companies
Shareholder contribution
Opening write-down
Year’s write-down
Closing accumulated write-down
Corporate ID
Site
556497-0787
556544-6225
556551-4493
556554-3161
556554-8673
556566-0445
556567-9445
3471825
556578-2694
556577-1606
25795938
3064392
556518-3455
556591-6524
556591-8421
980981215
556359-1097
199707629N
556535-3389
556538-0432
556542-2127
556544-6332
556563-8359
556566-1575
556566-0452
556571-9845
556575-7589
556575-9783
556579-4608
556579-4582
556576-8347
556577-4717
556581-6674
556498-6825
556551-4568
556582-4421
Stockholm
Stockholm
Stockholm
Stockholm
Stockholm
Stockholm
Stockholm
London
Stockholm
Stockholm
Copenhagen
London
Stockholm
Stockholm
Stockholm
Asker
Stockholm
Singapore
Stockholm
Stockholm
Stockholm
Stockholm
Stockholm
Stockholm
Stockholm
Stockholm
Stockholm
Stockholm
Stockholm
Stockholm
Stockholm
Stockholm
Stockholm
Stockholm
Stockholm
Stockholm
Total
Subsidiaries highlighted with an asterisk (*) will be merged with the respective parent company. No business is being conducted in these subsidiaries.
Two subsidiaries were merged with their respective parent companies
during 2005. Mobility Partner Invest AB merged with Mobility Partner
2005
2004
288 203
53 701
782
342 686
266 714
20 442
1 047
288 203
–164 624 –163 577
–782
–1 047
–165 406 –164 624
Book value
Cyber Com Consulting Stockholm AB
Cyber Com Consulting Uppsala AB
Cybercom Group Stockholm AB
Cyber Com Consulting EC AB
Cyber Com Consulting ER AB
Global Communication Solutions Nordic AB
Cyber Com Net Business Consulting AB
Cyber Com IT Consulting GB Ltd
Cybercom Mobility Stockholm AB
Cyber Com Mobile Communication Scandinavia AB
Cyber Com Consulting A/S
Cybercom Group UK Ltd
Cybercom CGSIT AB
Cybercom Öst AB
Cybercom Syd AB
Cybercom Norge AS
Cybercom Netcom Consultants AB
Diator Netcom Consultants Asia Pacific PTE Ltd
Cyber Com Consulting Innovation Stockholm AB
Cyber Com Consulting 603 AB
Cyber Com Consulting Business Uniware AB
Cyber Com Consulting Business Solutions AB
Cyber Com Consulting ConcentIT AB
Cyber Com Consulting Communications i Stockholm AB
Cyber Com Consulting CoreTech Stockholm AB
Cyber Com Pir New World Media AB
Cyber Com Consulting PM AB
Cyber Com Consulting ProvideIT AB
Cyber Com Consulting ConnectIT Sverige AB
Cyber Com Consulting Electronic Business AB
Cyber Com Consulting AE BS AB
Cyber Com Consulting I-Net Solutions AB
Cyber Com Consulting Syd AB
Cyber Com Intra-X AB
Cyber Com StreamIT AB
Mobility Partner Europe AB
33
177 280
Share of capital
& votes
No. of shares
/shares
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
90.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
1 001
1 000
1 000
1 000
1 000
1 000
1 000
45 000
1 000
1 000
5 549
100
1 114 350
10 000
10 000
1 001
5 000
100 000
1 000
1 000
1 000
1 000
1 000
1 000
1 000
1 000
1 000
1 000
1 000
1 000
1 000
1 000
1 000
1 000
108 003
1 372 000
123 579
Book
value
120
120
120
120
120
120
120
0
120
120
14 806
24 608
68 636
*
42 028
120*
120*
120*
120*
120*
120*
120*
120*
120*
120*
120*
120*
120*
120*
100*
4 591*
133*
19 618*
177 280
Europe AB, and Cybercom Syd Produkt AB merged with Cybercom Syd AB.
These mergers haven’t affected shareholders’ equity for the Group or parent
company, Cybercom Group Europe AB.
34
NOTES
13
As of 31 December 2005, one outstanding warrants programme remains,
which was implemented in November 2003 with these conditions:
ACCOUNTS RECEIVABLE
GROUP
Accounts receivable
2004
2005
2004
95 764
70 086
236
–
–
–23
–
–
95 764
70 063
236
–
Bad debts
Net accounts receivable
14
PARENT COMPANY
2005
OTHER RECEIVABLES
GROUP
2005
PARENT COMPANY
2004
2005
2004
Warrants
programme
Number of
new shares
Subscription
rate
Subscription
period
200 000
32.92 kr
16 Aug 2006–
16 Jan 2007
Number 9
Warrants programme 9 is intended for employees in the UK.
In December, 30,000 warrants were transferred; the remaining 170,000
are custodial as of 31 December 2005.
During 2005, warrants programme 8 (162,483) expired. At that time,
the Cybercom share’s market value was lower than the subscription rate, so
the warrants were not exercised.
No. of outstanding warrants at year’s start
162 483
Non-exercised warrants
–162 483
Non-invoiced revenue
for service assignments
22 670
25 522
–
–
Warrants programme 9
200 000
Other items
12 576
3 969
25
59
Less custodial warrants
–170 000
Total
35 246
29 491
25
59
Total outstanding warrants at year’s end
Market value of currency swap held of SEK 672 thousand is included in
other items for the Group.
15
18
30 000
UNTAXED RESERVES
PARENT COMPANY
PREPAID EXPENSES
2005
GROUP
PARENT COMPANY
2004
Tax allocation reserve, tax assessment 2001
332
332
2005
2004
2005
2004
7 327
7 327
3 048
1 999
1 708
17
903
–
37
73
26
5
1 728
1 533
492
343
Prepaid services and fees
238
254
40
31
Prepaid license fees
215
378
148
210
29
Prepaid rent
Prepaid leasing fees
Prepaid insurance premiums
Prepaid data communication
26
60
10
Other items
1 491
865
209
15
Total
6 783
5 162
2 633
650
16
Total
OTHER CURRENT INVESTMENTS
PARENT COMPANY
2005
2004
2005
2004
3-month certificates
–
9 960
–
9 960
Total
–
9 960
–
9 960
19
GROUP
Balance at year’s end
PARENT COMPANY
2005
2004
2005
2004
Non-deductible depreciation
on equipment
579
862
86
120
Capital insurance and
employer’s contribution
840
785
467
345
Reserves
251
11
4
4
Deficit deduction
3 529
10 102
–
1 278
Total deferred tax asset
5 199
11 760
557
1 747
–463
–27
–
–
–4 926
–4 496
–
–
Goodwill amortisation arising
from assets transfer
–469
–236
–
–
Fair value gain derivative
–188
–
–
–
Trademarks
–1 045
–
–
–
Total deferred tax liability
–7 091
–4 760
–
–
Deferred tax, net
–1 892
7 000
557
1 747
Tax allocation reserve
GROUP
Change in conversion of existing
subsidiaries for the year
7 659
DEFERRED TAX
Accumulated excess depreciation
Share capital consists of 12,321,757 shares with a quota value of 1.
All shares are fully paid up.
Balance at year’s start
–
8 611
Deferred tax liability
SHAREHOLDERS’ EQUITY
Translation difference in equity
49
The year’s provision for untaxed reserves is 952.
Deferred tax asset
GROUP
17
Accumulated excess depreciation
2005
2004
–4 153
–3 773
1 682
–380
–2 471
–4 153
Temporary differences exist in those cases where the recognised value or the
fiscal value are different for assets or liabilities. Temporary differences relating to the items above resulted in deferred tax liabilities and deferred tax
assets.
There is a temporary difference relating to acquired trademarks for investments in subsidiaries.
Deferred prepaid taxes and tax liabilities are offset when there is a legal
offset right for current prepaid taxes and tax liabilities and when the same
tax authority processes deferred taxes. After offsetting, these amounts were
derived and recognised on the balance sheet.
NOTES
Amounts on the balance sheet include:
GROUP
2005
Deferred prepaid taxes used
after more than 12 months
Deferred tax liabilities payable
after more than 12 months
PARENT COMPANY
2004
2005
3 914
7 200
536
435
–4 878
–4 518
–
–
Claims at period’s start
Acquired tax claims
Tax attributable to prior years
Period change
Book value
GROUP
ACCRUED EXPENSES AND PREPAID REVENUE
2004
Total deficit deductions amount to SEK 15,421 thousand. The Group believes that 13% of the deficit deduction can be used during 2006.
The rest can be used in the following years. So the deferred tax is taken at
its full value.
Change in deferred
prepaid taxes
23
PARENT COMPANY
2005
2004
2005
2004
11 760
17 147
1 747
3 071
–
–93
–
–
–471
–
–293
–
–6 090
–5 294
–897
–1 324
5 199
11 760
557
1 747
GROUP
PARENT COMPANY
2005
2004
2005
2004
Accrued salaries
10 641
8 976
2 344
2 055
Accrued holiday pay
13 655
11 943
612
658
Accrued social security fees
12 650
10 431
1 191
1 312
Accrued external services
4 323
5 733
–
962
Other items
6 032
2 801
1 101
1 080
47 301
39 884
5 248
6 067
Total
24
CONTINGENT LIABILITIES
The Group has no pledged assets or contingent liabilities – no changes from
last year.
25
INTEREST
GROUP
GROUP
Allocation for deferred taxes
2005
2004
Allocation at period’s start
4 760
4 855
484
–
Via acquisition of subsidiaries
Period allocation
Dissolution of allocation
Book value
20
2 246
236
–399
–331
7 091
4 760
Interest received
2004
Allocation at period’s start
–
9 993
Utilised allocations
–
–9 570
Period allocation
–
–
Dissolution of allocation
–
–423
Book value
–
0
1 899
2 632
–17
–
–73
–134
2 431
1 826
2 498
26
ADJUSTMENTS FOR ITEMS NOT INCLUDED
IN CASH FLOW
PARENT COMPANY
2005
2004
2005
2004
6 224
8 169
905
613
732
–129
–
–
Fair value gain derivative
–1 531
–
–
–
Profit at divestment of
non-current assets
–3 082
–
–1
–
1 285
163
99
–
–
–
782
1 048
Depreciation
Unrealised exchange rate differences
Loss at divestment of
non-current assets
Other
Total
–
–9 604
–
–
286
109
85
99
3 914
–1 292
1 870
1 760
PARENT COMPANY
2005
2004
2005
2004
442
377
325
240
Debt to Netcom Consultants’
previous shareholders
3 101
–
–
–
Total
3 543
377
325
240
OTHER CURRENT LIABILITIES
GROUP
Tax related liabilities
Total
2004
2 431
1 388
Allocations
OTHER NON-CURRENT LIABILITIES
GROUP
22
2005
1 405
Interest, net
Shareholder contribution
Employer’s contribution
on capital insurance
2004
GROUP
2005
21
PARENT COMPANY
2005
Interest paid
ALLOCATION FOR RESTRUCTURING
GROUP
35
PARENT COMPANY
2005
2004
2005
2004
17 027
17 242
2 034
2 844
8 263
5 084
1 843
318
25 290
22 326
3 877
3 162
36
NOTES
27
Acquired net assets
Patent, intangible non-current asset
INVESTMENTS IN TANGIBLE AND INTANGIBLE
NON-CURRENT ASSETS
Intangible non-current assets
The year’s investments
Group value of assets
in new subsidiaries
2005
2004
2005
2004
–9 723 –26 623
–1 655
–
1 102
350
18 486
–484
–1 604
Deferred tax liability
Current liabilities
–4 646
–4 646
–13 736
–13 736
1 625
4 505
Acquired net assets
–
–
20 020
–
–
Cash and cash equivalents in acquired subsidiaries
Effect on Group cash and cash
equivalents from acquisitions
Cash settled purchase price
–1 655
–
–12 411
–5 621
–2 847
–517
6 148
–
–
–
Effect on cash and cash equivalents
in investing activities
–6 263
–5 621
–2 847
–517
28
1 102
18 486
–
–6 603
Group value of assets
in new subsidiaries
Other current assets
–
Effect on cash and cash equivalents
in investing activities
–4 712
The year’s investments
4 000
350
5 011
Group value with
increasing ownership in
existing subsidiaries
553
–
Financial non-current assets
PARENT COMPANY
FAIR VALUE
553
Trademark, intangible non-current asset
The year’s total investments in tangible and intangible non-current assets
are:
GROUP
BOOK VALUE
7 650
–634
7 016
The following table shows net sales, profit and profit per share for the
Cybercom Group as if acquisition of Netcom Consultants had occurred on
1 January 2005:
GROUP
2005
Net sales
490 118
Year’s profit
23 435
Profit per share, SEK
1.99
ACQUISITIONS OF SUBSIDIARIES
On 1 May 2005, 100% of the share capital in Netcom Consultants AB was
acquired from Modern Holding. Netcom Consultants AB is an international telecom consultancy specialised in networks, billing, technology, and
services development. The fixed purchase price was SEK 35 million, which
was paid for with newly issued Cybercom shares and SEK 2.5 million in
cash. At the 25 April 2005 annual general meeting, consensus was reached
on a directed new issue of 1,125,402 shares to Modern Holding, the previous principal owner. The issue price was SEK 28.91, based on the listed
share price. An additional purchase price of SEK 1.8 million related to 2005
sales was determined in December. At acquisition, goodwill amounted to
SEK 37.5 million, which can be attributed to the diverse expertise the acquisition of Netcom Consultants contributes. Netcom Consultants belongs
to the Sweden business division.
Total worth of the acquired assets and liabilities, purchase prices, and effect on
the Group’s cash and cash equivalents concerning Netcom Consultants was:
Purchase price
Cash payment
2 465
Expenses directly linked to the acquisition
5 185
Fair value of shares issued
Additional purchase price
Total purchase price
32 535
1 843
42 028
Fair value for acquired net assets
–4 505
Goodwill
37 523
Acquired company’s contribution to the Group’s recognised sales and profit:
Netcom Consultant’s contribution
to the Group’s recognised sales
40 467
Netcom Consultant’s contribution
to the Group’s recognised profit
3 647
With warrant rights, three executives in Cyber Com Consulting A/S, the
Danish subsidiary, have acquired 9.9% of the shares in the subsidiary at the
nominal price per share for a total of SEK 67 thousand. The warrants gave
management the right to acquire 3.3% of the shares during each of these
periods: 20–30 March 2004, 20–30 March 2005, and 1–10 December 2005.
Additionally, there was a call option that gave Cybercom the right to acquire
subscribed shares (1) calculated on the company’s profit/loss after depreciation and (2) charged with 30% tax. During 2004, 3.3% of the shares were
acquired. During 2005, management used the remaining warrants and acquired a total of 6.6% of the shares in the subsidiary, resulting in a consolidated capital loss of SEK 267 thousand and SEK 539 thousand, respectively.
At the same time, Cybercom Group Europe AB exercised its right to repurchase these shares, some during Q2 2005 for SEK 3.7 million, which resulted
in goodwill of SEK 3.4 million, and some during Q4 2005 for SEK 8.0 million, which resulted in goodwill of SEK 7.5 million. Cyber Com Consulting
A/S belongs to the International business division.
Purchase price
Cash payment
11 673
11 673
Fair value of acquired net assets
–851
Goodwill
10 822
Acquired net assets
Minority share
BOOK VALUE
FAIR VALUE
851
851
Acquired net assets
851
851
Cash settled purchase price
11 673
Effect on Group cash and cash
equivalents from acquisitions
11 673
NOTES
29
32
SALES – SUBSIDIARIES
37
TRANSACTIONS WITH AFFILIATES
The parent company’s purchases and sales with Group companies
See note 28.
Effect on Group cash and cash equivalents were:
2005
Cyber Com Consulting A/S
Purchase price
45
Minority share
–851
Capital loss
–806
In 2005, the parent company sold internal services worth SEK 31.8 million
to Group companies (administration, management, and rental of premises
with applicable services); the figure for 2004 was SEK 26.1 million.
The parent company bought services from Group companies for
SEK 1.4 million. These purchases covered system support for administration systems within the Group. The purchase figure for 2004 was
SEK 0.5 million.
Purchases and sales with affiliates
Effect on Group cash and cash equivalents from sales
30
45
Executive management remuneration
DIVESTMENT OF ASSETS AND LIABILITIES
On 15 April, CyberMate PreHospital, Cybercom’s electronic journal management system for emergency care, and its associated operation, were sold
to Medtronic, a leading medicine technology group. This sale was a step on
the way toward Cybercom’s focus on telecom and selected technologies.
CyberMate, which was an internally developed intangible non-current
asset, was sold along with its tangible non-current assets and receivables for
SEK 19.4 million. The deal covered the investments Cybercom made in the
operation and resulted in a positive effect on the cash account. An additional purchase price of SEK 1.6 million was determined in December.
Total value of transferred assets, purchase prices, and effect on Group cash
and cash equivalents was:
2005
Intangible non-current assets
14 754
354
Other current assets
1 071
Selling costs
120
Profit on sale
3 082
19 381
Less purchase price financed via loan to the buyer
–5 091
Less investment, not yet disposable
–1 591
Effect on Group cash and cash equivalents from divestment
12 700
31
No purchases or sales with affiliates occurred in 2005.
In 2005, salary and other remuneration paid to the CEO of the parent
company was SEK 3,847 thousand; variable compensation accounts for
SEK 1,549 thousand of this amount.
Salary and remuneration to other executives totalled SEK 13,347 thousand; variable compensation accounts for SEK 2,127 thousand of this
amount. This affected ten persons of which one worked part of the year.
Executives’ salaries and compensation consist of two parts: fixed and
variable. The fixed part is comparable to the person’s base salary; the variable part is based on achieved objectives during the year. One executive has
no variable compensation.
A medical insurance benefit is available to the executives.
A premium-based pension provision of 30% of gross salary is made for
the CEO. A provision of 25% of gross salary is made for one of the other
executives. An additional seven persons receive pension provisions as per
the Group’s age- and salary-based premium plan. Pension insurance
schemes, equivalent to the ITP plan, cover one executive.
Besides benefits described above for executives, there are no specific
pension benefits.
Other agreements with executive management
If the company cancels the CEO’s contract, then besides a salary during the
six-month notification period, the CEO is entitled to severance pay equal to
six months’ salary. One other executive is also entitled to a salary during the
six-month notification period and severance pay equal to six months’ salary. If the company cancels other executives’ contracts, then a 4–12 month
notification applies, and no severance pay is granted.
Board remuneration
CASH AND CASH EQUIVALENTS
GROUP
PARENT COMPANY
The board receives SEK 695 thousand; of this amount, SEK 150 thousand
goes to the board chairman. The remaining SEK 545 thousand is divided
among the other board members. Payment is made during 2006.
2005
2004
2005
2004
Warrants
–
9 960
–
9 960
Cash and bank deposits
55 453
37 761
37 046
7 794
There are 30,000 outstanding warrants for executives from warrant programme 9.
55 453
47 721
37 046
17 754
Current investments
Decision on remuneration and benefits for executives
Each year, the annual general meeting sets the board’s compensation. The
board sets (1) the CEO’s annual salary and benefits (for which the board
chairman is ultimately responsible) and (2) other executives’ salaries and
benefits.
Other transactions
In separate notes, there is information on:
- Salaries and compensation for the CEO and board
- Transactions with Group companies
As per IAS 24, no other transactions with affiliates occurred during 2005.
38
PROPOSAL OF APPROPRIATION
Parent company
These amounts are at the AGM’s disposal:
Accumulated profit
Profit for the year
SEK 5 799 425
SEK 2 281 239
SEK 8 080 664
The board and CEO propose that profit is appropriated as follows:
Carried forward to a new account
SEK 8 080 664
Assurance
To the best of their knowledge, the board members assure that the annual report was prepared according to good accounting policies for stock-exchange-listed companies. Submitted information agrees with current circumstances. No important
information is missing, i.e., information that could affect the company’s image that is created by the annual report.
Stockholm, 24 March 2006
Gert Schyborger
Chairman
Per Edlund
Ulf Körner
Lars Persson
Kerstin Ryer
Peter Törnquist
Mats Alders
President and CEO
AUDITORS’ REPORT 39
Auditors’ report
To the AGM of Cybercom Group Europe AB
Swedish corporate ID 556544-6522
We audited the 2005 annual accounts, consolidated
accounts, and bookkeeping as well as administration of
the company by the board and CEO of Cybercom Group
Europe AB. The board and CEO are responsible for the
accounts, company administration, ensuring that the
annual accounts comply with the Annual Accounts Act
and the EU-adopted IFRS, and ensuring that the consolidated accounts comply with the Annual Accounts Act. We
are responsible for expressing an opinion (based on our
audit) on the annual accounts, consolidated accounts, and
administration.
We conducted our audit according to generally accepted
auditing standards in Sweden. These standards require us to
plan and perform the audit to obtain reasonable assurance
that the annual accounts and consolidated accounts are free
of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures
in the accounts; it also includes assessing the accounting policies used and their application by the board and the
president, assessing significant estimates made by the board
and the president, as well as evaluating overall presentation
of information in the annual accounts and the consolidated
accounts. As supporting evidence for our statement below
on discharge from liability, we examined significant
decisions, actions taken, and circumstances of the company
– to be able to determine whether any board member or the
president is liable to the company, and whether they have in
any other way acted in contravention of the Swedish
Companies Act, the Swedish Annual Accounts Act, or the
Articles of Association.
The annual accounts were prepared as per the Swedish
Annual Accounts Act and thus provide an accurate picture
of the company’s outcome and position, according to
generally accepted auditing standards in Sweden. The
consolidated accounts comply with the EU-adopted IFRS
and thus provide an accurate picture of the Group’s
outcome and position. The directors’ report is consistent
with the annual accounts and the consolidated accounts.
We recommend that the AGM adopt the income
statement and balance sheet for the parent company and
the Group, allocate the profit of the parent company as
per the proposal in the directors’ report, and discharge the
board members and the CEO from liability for the
financial year.
Stockholm, 27 March 2006
Öhrlings PricewaterhouseCoopers AB
Ulf Pettersson
Authorised public accountant
40
CORPORATE GOVERNANCE REPORT
Corporate governance report for
Cybercom Group Europe AB (publ)
Swedish code for corporate governance
Cybercom Group Europe AB (publ) is listed on the
Stockholm stock exchange’s O list. The Group’s market
value is below SEK 3 billion. So Cybercom need not apply
the Swedish code for corporate governance. But the board
decided to largely follow the code. The board believes that
the company fulfils the new requirements and that
currently, the code requires no substantial changes for the
company. The code’s purposes are to:
• Contribute to improved governance of Swedish
companies.
• Strengthen efficiency and competitiveness of Swedish
business and industry.
• Build trust in Sweden’s capital market and in society at
large, thus enabling good conditions for Swedish
business and industry.
• Enhance knowledge of and confidence in Swedish
corporate governance among foreign investors and
other international capital market players and thus
facilitate access to foreign venture capital, under good
terms and conditions, for Swedish business and
industry.
•
•
•
•
•
ance Board, the internal control report is limited to
describing the way in which internal control is organised.
The auditors did not review the board’s corporate
governance report, as per the Swedish Corporate
Governance Board instructions.
Cybercom’s board has no auditing committee. The
entire board takes responsibility for ensuring that the
audit effectively assures that the Group has acceptable
internal control procedures and correct, high-quality
financial presentation.
As per the code, the board submits a proposal regarding auditor appointment. The board is responsible for
information on and presentation of the proposed
auditor when an auditor must be appointed.
Cybercom has no internal audit function. The board
believes that there is no need for such a function in the
operation and that it is not financially feasible in an
organisation as small as Cybercom.
Cybercom’s board has a deputy, who was appointed at
the 2005 AGM, after the nomination committee’s
proposal to select a deputy who can, during a limited
period, learn about the company during the run-up to
the next AGM.
Corporate governance
Cybercom’s board and executives work diligently with
corporate governance issues. Three of the largest shareholders are represented on the board. The company’s
nomination committee requires that board members have
the appropriate expertise. A remuneration committee
strives to create the best possible conditions for reasonable
compensation and bonus levels. The audit committee
consists of all board members who work closely with
the company’s auditors. Individual shareholders may
submit proposals to the committees, via regular mail, to
Cybercom’s headquarters in Stockholm.
Articles of association
Cybercom’s Articles of association describe the company’s
operation; shareholders’ rights; number of board members, deputies, and auditors; way in which AGM notification is issued; way to enrol for the AGM; the AGM’s
agenda; and the company’s financial year. At the 2006
AGM, Cybercom will propose new Articles of association
in compliance with the new Companies Act that went into
effect on 1 January 2006. Visit www.cybercomgroup.com
to view the current Articles of association, which were
enacted on 29 April 2004.
Exceptions
• Cybercom determined that general meeting participation, via modern communication technologies, is not
financially feasible.
• As per the code, the board must report on the way in
which internal control (related to financial presentation)
is organised and how well it worked during the most
recent financial year. With reference to a 15 December
2005 statement from the Swedish Corporate Govern-
Annual general meeting (AGM)
The AGM is the decision-making body in which all shareholders can participate. At the AGM, developments in the
company are presented and decisions are made on several
central items, such as dividends, remuneration for the board
and auditors, changes to the articles of association, appointment of auditors, discharge from liability for board members,
and election of the board for the coming 12 months. The next
AGM will be held on 28 April 2006.
2005 AGM
Cybercom Group Europe AB (publ) held its AGM on
22 April 2005. AGM consensus coincides with board
proposals described in the AGM notice.
The AGM unanimously approved these items:
Board election.
As per the nomination committee’s proposal, the AGM
elected six regular members and one deputy. These regular
members were re-elected: Gert Schyborger (as chairman),
Per Edlund, Lars Persson, Kerstin Ryer, and Peter Törnquist. Ulf Körner (regular member) and Hampus Ericsson
(deputy) were newly elected.
AGM approval of no dividends for 2004.
Authorisation for new share issue linked to acquisitions.
As per the board’s proposal, the AGM authorised the
board to decide on increasing the company’s share capital
via new share issues for at most 1,500,000 shares – on one
or more occasions, up to the time of the next AGM. The
board may decide to deviate from shareholders’ preferential rights and to use payment methods other than
monetary. The authorisation concerns share issues linked
to acquisitions of companies or operations in which
payment consists totally or partially of shares.
Selection of nomination committee.
The AGM approved appointment of a four-member
nomination committee. Per Edlund was elected chairman
(representative for majority shareholders). Gert Schyborger (board chairman) and John Örtengren (representative for minority shareholders via the Swedish Shareholders’ Association) were also elected. The AGM approved
appointment of one additional member – at least six
months before the 2006 AGM (as another majority
shareholder representative for the four largest [votes]
shareholders, as per the ownership structure during Q2
2005). Magnus S Eriksson, portfolio manager for
Livförsäkringsaktiebolaget Skandia, was later appointed
as the fourth member.
41
issues. The nomination committee prepares requirement
specifications and ensures that the company’s board
members have expertise relevant to Cybercom’s operation.
The nomination committee works closely with the
shareholders and meets three times a year.
Cybercom’s AGM in 2005 elected a four-member
nomination committee; its term of office runs until a new
committee is elected or otherwise determined by the AGM.
The nomination committee chairman must represent
majority shareholders, unless otherwise agreed by the
committee members.
The 2005 AGM decided that if during the nomination
committee’s term, shareholders that are represented in the
nomination committee are no longer majority shareholders, then the member who represents such shareholders
must make his or her position available. Shareholders,
which are then in the majority, have the right to appoint a
new committee member. Shareholders, which appointed
nomination committee members, have the right to
discharge the members and appoint new members. As
soon as nomination committee membership changes, this
information must be made public.
Cybercom’s AGM in 2005 charged the nomination
committee with proposing the following before the 2006
AGM:
The AGM chairman.
Board members.
Board chairman.
Board remuneration, with distinction between the
chairman and other members and remuneration for
possible committee work.
• Auditors’ fees.
• Nomination and remuneration committees for the
2007 AGM.
•
•
•
•
Cybercom’s AGM in 2005 decided that as part of its
mission, the nomination committee must carry out tasks
specified in the Swedish code for corporate governance
regarding nomination committees. Such tasks include, e.g.,
passing on certain information to the company so that the
company can fulfil its communications obligations as per
the code.
Selection of remuneration committee.
Gert Schyborger, Kerstin Ryer, and Per Edlund were
elected to the remuneration committee.
Nomination committee
The AGM elects a nomination committee. Before the next
AGM, the committee must submit proposals for board
members, auditors, remunerations, and other relevant
42
Board
The board and its work
The board is responsible for the Group’s organisation and
management as per the Swedish Companies Act. A fixed
programme regulates distribution of responsibilities
between the board and Cybercom’s CEO. As per this
programme, the board takes decisions on the CEO
appointment, the main organisation, long-term financial
planning, operation plans, the budget, and annual reports.
The programme is considered and fixed annually. The
board formulates CEO and reporting instructions, and
Cybercom’s CEO is responsible for planning and implementing initiatives as per board decisions and the company’s ongoing administration.
The board consists of six members and a deputy who
represent a broad range of expertise in IT, telecom, business
development, and other areas. Three of the largest owners
are represented on the board; on 31 December 2005, they
represented a total of 36.4% votes in Cybercom. During
2005, the board met 11 times.
The nomination committee reviews and evaluates the
board’s work and individual member’s contributions. The
Swedish code for corporate governance specifies that the
board must ensure that its work is evaluated annually,
using a structured, systematic process. In 2005, these items
were investigated in detail:
• The board and its work.
• Board committees.
• Insight into and knowledge about Cybercom (parent
company and Group).
• Insight into and knowledge about regulations and
control models.
• Satisfaction with Cybercom’s current board and its
work.
• Views on scope and direction of the board’s work.
• The board’s educational needs.
Based on the evaluation’s results, the board moves forward
to follow up with a new evaluation annually.
Board remuneration
The AGM approved the following for the board it elected
in 2005: the board receives SEK 695,000; of this amount,
SEK 150,000 goes to the board chairman. Each of the other
board members receives SEK 100,000 and deputy remuneration is based on the number of board meetings that the
deputy attends. No remuneration is granted for committee
work.
COMMITTEES
Audit committee
The audit committee consists of all board members and is
charged with proposing auditors and approving their fees.
Remuneration committee
Cybercom’s remuneration committee establishes salaries
and other employment terms for the CEO, vice president,
and other executives. The remuneration committee strives
to create the best possible conditions so that benefit issues
are treated comprehensively and carefully. The remuneration committee met three times in 2005. It consists of:
1. Gert Schyborger, Cybercom’s board chairman.
2. Kerstin Ryer, board member and CEO of HumanPartner AB. She was the HR director of Skandinaviska
Enskilda Banken AB and If Skadeförsäkring AB. She has
extensive experience in developing remuneration policies
and terms of employment.
3. Per Edlund, CEO Consafe IT AB and JCE Gruppen
Fastighets AB. Board member and representative for the
majority shareholders.
Cybercom’s board
Name
Gert Schyborger, chairman
Per Edlund
Lars Persson
Kerstin Ryer
Peter Törnquist
Ulf Körner
Hampus Ericsson, deputy
Board
attendance
Remunerations
committee
Independent
attendance
11/11
10/11
10/11
11/11
8/11
7/7*
5/7*
1)
o
x
o
o
o
x
x
3/3 (chair)
3/3
3/3
Audit
committee Remuneration,
attendance SEK thousand2)
2/2 (chair)
2/2
2/2
2/2
2/2
2/2
x= Member considered independent of Cybercom and its management.
o= Member considered independent of Cybercom, its management, and its majority shareholders.
1) As defined in the Swedish code for corporate governance.
2) Sum relates to board members’ fees; all members received board remuneration only.
* Elected as new member at the 2005 AGM, after which 7 board meetings were held.
150
100
100
100
100
100
45
Share
holdings
Warrants
5 000
28 194
–
–
62 725
–
1 507 100
–
–
–
–
–
–
–
Chairman
Members
Gert Schyborger, born in 1940.
Board member and chairman
since 2000. Worked with CelsiusTech and SAAB and has extensive technology and international
business experience.
Other board positions: Board
chairman of MSC AB and IST AB.
Board member of Rote Consult
AB, Pointer AB and Enlight AB.
Cybercom holdings: 5,000 shares.
Per Edlund, born in 1958.
Board member since 2003. Represents the JCE Group’s ownership
in Cybercom. CEO of Consafe IT
AB and JCE Gruppen Fastighets
AB. Contributes business acquisitions and development expertise
to the board.
chairman of Docteq AB, PipeChain
AB, and PipeChain Sweden AB;
board member of Smarteq AB and
Consafe Logistic AB, BV, and AS.
Cybercom holdings: 28,194
shares.
Members
Kerstin Ryer, born in 1948.
Board member since 2000. CEO
of HumanPartner AB; was HR
director of Skandinaviska Enskilda
Banken AB and If Skadeförsäkring
AB. Has extensive experience in
developing remuneration policies
and terms of employment.
Other board position: Board
member of HumanPartner AB.
No holdings in Cybercom.
Ulf Körner, born in 1946.
Board member since 2005. Professor of telecom traffic systems and
head of the Institute for Telecommunications Systems at Lund Technical University. Contributes extensive telecom market knowledge and
experience.
Other board positions: Board chairman of UpGrade Communication
AB and board member of the National Post and Telecommunications
Agency, Doro AB, Cale Ticketing
Gruppen AB, and Consafe IT AB.
No Cybercom holdings.
43
Lars Persson, born in 1956.
Board member since 1998. CEO
of Marratech AB. Contributes
valuable expertise and deep insight into the telecom market –
thanks to extensive telecom industry experience (management) for
companies such as Telia Mobile
and Telenor.
member of Marratech Inc.,
Repeatit AB and Turn to Törn AB.
Deputy
Peter Törnquist, born in 1953.
Board member since 1998. Senior
managing director of CVC Capital
Partners. Contributes experience
in international business, business
development, acquisitions, and
financing – thanks to management positions held in Lehman
Brothers and Bain & Company.
chairman of DT GROUP A/S and
Starbreeze Studios AB; deputy
chairman of Post Denmark.
Hampus Ericsson, born in 1972.
Cybercom board deputy since
2005. CEO of Consafe Invest AB.
Previously employed as IR manager
at Consafe Offshore AB (publ).
Also worked for Enskilda Securities
(Corporate Finance) in London and
for JCE Group AB.
Other board position: Board
member of the JCE Group AB.
Cybercom holdings: 1,507,100
shares via Henriksbergs Fastighets AB.
44
Executives
Cybercom’s president and CEO manages, organises, and
develops the business in such a way that goals established
by the board regarding profitability and direction are
achieved. Written instructions determine work distribution between the board and the CEO. The CEO submits a
monthly report to the board. Work distribution rules also
regulate the CEO’s financial framework.
Cybercom strengthened Group management to better
reflect the company’s focus on telecom and its international growth strategy, e.g., in 2004, the executive team
increased from four to ten persons. During annual
budgeting, the board and Group management establish the
operation’s framework and lay the groundwork for strong
decentralisation of the Group’s operation. Common
policies establish the framework for management and
follow-up. Cybercom also has IT security, crisis management, equal opportunity, environmental, HR, and ethnic
diversity policies.
Facilitating the board’s work
Before board meetings and at other times, the CEO must
provide the board with necessary information and
decision-support material. The CEO assumes a reporting
role at board meetings and delivers motivated proposals
for decisions; as deemed suitable, the CEO may delegate
this task to a subordinate in special instances. Cybercom’s
marketing and communications director records boardmeeting minutes.
Executive management of business divisions
Managing directors of the Cybercom Group’s subsidiaries
report to the Group’s vice president, who is responsible for
the company’s two divisions. The vice president reports to
the CEO, who in turn, reports to the board. Each month
the subsidiaries submit operations reports that describe:
• New and existing business.
• Possible lost business or projects.
• New prospects/customers.
• Capacity/resource utilisation.
• Threats and opportunities.
Finance policy
The finance policy regulates division of financial responsibilities and authorities between the board, the CEO, the
CFO, and the subsidiary managers. The finance policy
covers currency and cash management and finances.
Communication policy
Cybercom intends to increase interest in Cybercom shares
with existing and potential investors. This is done by
actively and quickly providing the market with relevant,
current information. Openness and a high level of service
are also part of Cybercom’s ambition to develop the stock
market’s confidence in the company. During the year,
Cybercom met regularly with investors and capital market
companies. At www.cybercomgroup.com, you’ll find all
published information on the Group’s development, stock
market information, and other key data. The board
chairman, the CEO, or the marketing and communications
director initiates all external contact with the market.
Remuneration to executives
Name
SEK thousand
CEO Mats Alders
Executive management
Year
Variable
Base salary compensation*
Pension
costs
Financial
instrument
Other
Total
2005
2 112
1 549
186
644
–
–
4 491
2004
2 112
528
452
644
–
–
3 736
2005
11 220
2 127
33
1 436
–
–
14 811
2004
11 907
1 317
26
2 977
–
–
16 227
*Variable pay is pegged to objectives and part of a multi-year contract.
Other
benefits
45
Parent company
Mats Alders, born in 1958.
President and CEO.
Employed since 1998: CFO from
1998-2000 and vice president
from 1999-2000. B.S., M.S., business and finance from Stockholm
University and the IHM Business
School in Stockholm.
Previous employment: CelsiusTech,
Tele2, and TietoEnator.
Bengt Levin, born in 1955.
Vice president.
Employed since 2000. M.S., Lund
Technical University.
Previous employment: TietoEnator
and his own operation.
Anneli Lindblom, born in 1967.
CFO.
Employed since 1999. M.S., economics, Frans Schartau Stockholm.
Previous employment: Celsius
Tech, Bofors Systems, and Företagarnas Revisionsbyrå.
Kristina Svensson, born in 1968.
Marketing and communications
director.
Employed since 1999. M.A.,
Uppsala University.
Previous employment: Linköping
University Hospital.
Alf Eriksson, born in 1961.
Managing director Cybercom Netcom Consultants AB.
Employed since 2005. Studied
information technology at Stockholm University and market economics at IHM. Previous employment: Frontec Konsulter AB,
Ericsson, and Netcom Consultants.
Henrik Gavelli, born in 1960.
Managing director Cybercom Mobility AB.
Employed since 1999. M.S., Royal
Institute of Technology, Stockholm.
Previous employment: Ericsson,
Devenator AB, and his own operation.
Johan Glimskog, born in 1966.
Managing director Cybercom GCS
AB.
Employed since 1996. Studied
information technology at Stockholm University.
Previous employment: SJ Data and
Assisstor.
Peter Keller-Andreasen, born in
1956. Managing director Cyber
Com Consulting A/S.
Employed since 2001. B.S., electronics engineering, Denmark
Previous employment: TietoEnator
A/S and Digital A/S.
John Kolsvik, born in 1954.
Managing director Cybercom
Norge AS.
Employed since 2004. B.S. engineering, Oslo University. Previous
employment: HiQ AS, El Tele AS,
France Telecom, Kvaerner Process
System, and Computervision.
Subsidiary Management
Thomas Barge, born in 1962.
Managing director, Cybercom Syd
AB.
Employed since 2003. M.S., Lund
Previous employment: Consafe
Infotech Syd AB, Consafe Infotech
AB, and Exallon Systems AB.
Subsidiary Management
Terry Hunter, born in 1962.
Managing director Cybercom
Group UK.
Employed since 2003. Attended
East Herts College in the UK.
Previous employment: CBI International and Reuters.
Cybercom holdings: 30,000 warrants.
46
Auditors
The AGM appoints auditors every fourth year (most
recently in 2004). The auditors must audit Cybercom’s
annual report, its accounting records, and the asset
management activities of the board and the CEO on behalf
of shareholders. The auditors continuously report to the
board. Öhrlings PricewaterhouseCoopers and auditor
Ulf Pettersson were selected to serve up to 2008. During
the year, the board receives presentations that Cybercom’s
auditors reviewed to ensure that the company’s internal
and external presentations fulfil requirements on stockexchange-listed companies.
Auditors’ report
Each year, the auditors prepare a report that, among other
things, describes the way in which the company’s organisation is structured so that bookkeeping, asset management,
and the company’s financial circumstances in general can
be controlled in a satisfactory way. Auditing occurs
continuously throughout the year. Auditors must also
attend the year’s first regular board meeting when Group
and parent company income and balance sheet statements
are discussed. During the meeting, the auditors’ give a final
report regarding their audit of internal controls, administration, and final, year-end statements.
SEK thousands
2005
2004
2003
Remuneration for audits
1 496
1 362
1 281
345
569
9
Remuneration for other consultations
Internal controls
The board has overall responsibility for Cybercom’s
internal controls. Management and internal control follow
the Group’s common reporting structure, finance policy,
and other policies established by the parent company’s
board. Auditors examine internal reporting procedures
each year during the annual audit. The auditors also
prepare an annual risk analysis for the Group. The auditors’
review of internal controls and risks is presented in a
report that is submitted to the board.
ADDRESSES
47
Addresses
Stockholm
Cybercom Group
Fleminggatan 20
Box 7574
SE-103 93 Stockholm, Sweden
Tel: +46 (0) 8 578 646 00
Fax: +46 (0) 8 578 646 10
London
Cybercom Group UK Ltd
128 Cheapside
London EC2V 6BT
England
Tel: +44 (0) 20 7796 4700
Fax: +44 (0) 20 7796 4701
Malmö
Cybercom Syd
Adelgatan 9
SE-211 22 Malmö, Sweden
Tel: +46 (0) 40 691 96 00
Fax: +46 (0) 40 691 96 96
Copenhagen
Cybercom Denmark
Vesterbrogade 149
1620 Copenhagen, Denmark
Tel: +45 (0) 70 42 42 70
Fax: +45 (0) 70 42 42 72
Linköping
Cybercom Group
Teknikringen 7
SE-583 30 Linköping, Sweden
Tel: +46 (0)13 210 650
Fax: +46 (0) 13 21 35 78
Oslo
Cybercom Norway
Drammensveien 167
0277 Oslo, Norway
Tel: +47 (0) 982 99 600
Fax +47 (0) 983 99 600
Sundsvall
Cybercom Group
Storgatan 29
SE-852 30 Sundsvall, Sweden
Tel: +46 (0)60 17 40 50
Fax: +46 (0)60 17 40 57
Singapore
Netcom Consultants
4 Shenton Way
#14-03 SGX Centre 2
066807
Singapore
Tel: +65 (0) 6536 2780
Fax: +65 (0) 65362781
48
FÖRVALTNINGSBERÄTTELSE
Content and production: Cybercom with Hallvarsson & Halvarsson.
Design: AD Larsson Reklambyrå. Graphic production: Gylling Produktion, Gustavsberg.
Photos: Håkan Flank. Repro and printing: Edita. Translation: American Writing & Editing AB.
Contents
Driven by sense
The year in brief
1
President’s report
2
4
5
Market overview
6
Business processes
8
Cybercom is a leading
IT consulting company
The Cybercom Group Europe AB annual general meeting is on
28 April at 11 AM in Cybercom’s head office on Fleminggatan
20 in Stockholm. AGM participant registration starts at 10 AM.
that’s specialised in tele-
Shareholders who wish to participate in the AGM must:
com. Cybercom transforms
2005 ANNUAL REPORT
Directors’ report
12
16
Definitions
16
Consolidated income statement
18
Share data
18
Consolidated cash flow statement
19
Consolidated balance sheet
20
Change in equity – Group
21
Parent company
22
23
Notes
29
38
Auditors’ report
39
Corporate governance report
40
Addresses
47
49
AGM
cutting-edge technologies
into commercially viable
solutions that enhance its
customers’ offerings.
• Be entered in the VPC AB share database by Saturday,
22 April 2006 (because banks are closed on this day, entry
must be made by Friday, 21 April 2006 at the latest).
• Have enrolled themselves, and the number of their
representatives’ who will attend the AGM, at Cybercom’s
head office by Tuesday, 25 April 2006 by 12 NOON. Shareholders whose shares are registered in the names of
nominees (through banks’ notaries or other administrators)
must temporarily register the shares in their own names if
they want to exercise their voting rights at the AGM; such
registration must be done with VPC AB well before
Saturday, 22 April 2006.
Notification of AGM participation
You may submit notification by:
•
•
•
•
Mail and send it to: Cybercom Group Europe AB (publ),
Box 7574, SE 103 93 Stockholm, Sweden (write AGM
notification on the envelope), or
Phone: +46 8 578 646 00, or
Fax: +46 8 578 646 10, or
E-mail: [email protected]
Please specify name, address, phone number, Swedish personal
identity number (or corporate ID), and number of shares.
Welcome!
Cybercom was founded in March 1995. The concept was to form a small, yet highly capable consulting company with the best
consultants in the business. In 1996, when Cybercom consisted of about a dussin consultants, the idea of creating a group was born.
Offering career opportunities enabled the company to attract and keep the right people. This proved to be a successful model.
Interim financial reports
Cybercom has had a growth strategy from the start. Growth is partly organic and partly achieved through strategic acquisitions.
Cybercom was listed on the stock exchange in 1999, which created greater potential for further expansion. In 2001, Cybercom set up
operations in Denmark; in 2002, in the UK; and in 2003, in Norway. During 2005, Cybercom gained a foothold in Asia by acquiring
Netcom Consultants with offices in Singapore. The Group currently has more than 400 employees in Denmark, Norway, Singapore,
Sweden, and the UK.
• January-June: Thursday, 17 August 2006
• January-March: Wednesday, 26 April 2006
• January-September: Wednesday, 18 October 2006
• 2006 year-end: Thursday, 8 February 2007
Cybercom Group
2005 annual report
Sales +17%
Telecom +33%
Operating profit +112%
Cash flow from operating
activities +111%
Profit per share +98%
Cybercom Group • Box 7574 • 103 93 Stockholm, Sweden
Tel +46 8 578 646 00 • www.cybercomgroup.com

Annual report 2005

Transcription

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