NORMAN ASA 4. kvartal 2006 / 4 th quarter 2006 Lysaker, 25. januar 2007 / 25 th January 2007
Norman solid resultat i et år med endring Datasikkerhetsselskapet Norman ASA oppnådde 9 prosent vekst i omsetning i 2006 og et foreløpig resultat før skatt på 36,4 millioner kroner (en økning på 5 prosent fra 2005). Resultatmarginen var solid og uendret fra året før, med en EBITDA-margin på 16 prosent. EBITDA for 2006 ble 39,6 millioner kroner (2005: 37,4 millioner kroner). Selskapets drift genererte en netto kontantstrøm på 41,7 millioner kroner, sammenlignet med 23,0 millioner kroner året før. Årets omsetning ble 252,4 millioner kroner (2005: 231,2 millioner kroner). Gjennom året gjennomførte Norman en rekke tiltak for å refokusere virksomheten. Det foreløpige årsresultatet viser at selskapet opprettholdt sterk vekst og lønnsomhet samtidig som det gjennomgikk omfattende strategiske endringer. Norman hadde glede av en betydelig forbedret kontantstrøm i 2006. Normans omsetning for fjerde kvartal økte med 4 prosent til 65,2 millioner kroner, mot 62,5 millioner kroner i samme periode året før. Kvartalet endte med et EBITDA-resultat på 9,1 millioner kroner (2005: 10,0 millioner kroner), som tilsvarer en EBITDA-margin på 14 prosent. Fjerde kvartal er tradisjonelt ikke Normans sterkeste i forhold til vekst og lønnsomhet. Den noe reduserte veksttakten og lønnsomheten i fjerde kvartal skyldes delvis sesongsvingninger, men reflekterer også reorienteringen av selskapet med vesentlige investeringer fra andre halvår i 2006. De strategiske fokusområdene for Norman i 2006 har gitt følgende resultater: Norge: Etter å ha reversert den negative utviklingen i selskapets hjemmemarked, er det skapt grunnlag for fremtidig vekst i Norge. Produkt: Normans produktutvikling er blitt mer målrettet og kraftfull gjennom økte investeringer i ledende teknologi (Norman SandBox og Norman Network Protection). Teknologisalg: Strategisk tilstedeværelse i California er etablert, og flere viktige kontrakter har blitt signert. Markedet for datasikkerhet er i stadig endring og skaper nye muligheter for Norman. Mens tallet på angrep fra uønsket programvare øker sterkt, er store utbrudd av nye enkeltvirus som skaper internasjonal alarm, blitt langt sjeldnere. Datakriminelle ser nå ut til å sikte seg inn mot økonomisk vinning, og angriper på en målrettet måte samfunnsviktige infrastrukturer og større selskaper i stedet for å skape forstyrrelser for det store antall databrukere. Tradisjonell antivirusteknologi fortsetter å være et attraktivt og lovende vekstmarked også i fremtiden. På den annen side krever den nye utviklingen mot mer sofistikerte angrep en ny type teknologi for å analysere og forhindre målrettede angrep mot store selskaper og kritiske infrastrukturer. Til dette formål har Norman utviklet en familie av avanserte verktøy for analyse av uønsket programvare. Normans SandBox er dokumentert teknologi i verdensklasse i forhold til å søke gjennom store mengder data. Mistenkelige filer blir kjørt i et emulert miljø hvor de ikke kan skade infrastrukturen. I 2006 har ti internasjonale organisasjoner - nasjonale sikkerhetsmyndigheter og store selskaper - testet ut selskapets nye, avanserte Norman SandBox analyseprodukter. Syv av disse har allerede signert kontrakter for å benytte Norman til beskyttelse av sin infrastruktur og analysere trender innen uønsket programvare. Et stort antall nye interessenter har startet testing av disse produktene. I tiden som kommer vil Norman fortsette å vokse i selskapets tradisjonelle markeder så vel som å forfølge de nye mulighetene som er skapt gjennom utviklingen på datasikkerhetsområdet. Normans finansielle stilling er fortsatt solid. Selskapet har ingen rentebærende gjeld og har en betydelig positiv kontantstrøm, som beskrevet over. Kontantbeholdningen var 78 millioner kroner ved årets slutt. Selskapet kjøpte egne aksjer for 40 millioner kroner i 2006. Selskapet vil fortsette å gi avkastning til eierne ved tilbakekjøpsprogram og utbyttepolitikk. Konsernet hadde ved utgangen av 2006 skattemessig fremførbare underskudd på 130 millioner kroner. Antall årsverk i konsernet var 191 ved utgangen av 2006 (183 ved utgangen av 2005). Norman forventer fortsatt vekst og lønnsomhet også i 2007. Selskapet vil dra fordel av de endringer og investeringer som ble gjennomført i 2006 og vil investere ytterligere i både produktutvikling og de nye forretningsområdene i 2007. ******************************************************************************************** Vedlagt følger et sammendrag av resultatregnskap og balanse for fjerde kvartal 2006. For ytterligere informasjon, kontakt Svein Ramsay Goli, styreformann (9075 6757) eller Trygve Aasland, administrerende direktør (6710 9717 eller 4153 9717). ********************************************************************************************
Norman robust performance in a year of change Norman ASA, the Norwegian data security company, posted a 9 per cent revenue growth in 2006 and preliminary result before tax of NOK 36.4 million (up 5 per cent from 2005). Profit margins for 2006 were strong and at the same level as the year before, with an EBITDA margin of 16 per cent. EBITDA for 2006 came in at NOK 39.6 million (2005: NOK 37.4 million). Operations generated a net cash flow of NOK 41.7 million, compared to NOK 23.0 million the previous year. Net revenues for the year were NOK 252.4 million (2005: NOK 231.2 million). Throughout 2006 Norman implemented a series of refocusing initiatives. The preliminary results demonstrate that the company maintained strong growth and profitability while undergoing substantial strategic changes. Norman benefited from a substantially improved cash flow in 2006. Norman s net revenues for the fourth quarter increased by 4 per cent to NOK 65.2 million, compared to NOK 62.5 million in the same period the previous year. Norman ended the quarter with an EBITDA of NOK 9.1 million (2005: NOK 10.0 million), corresponding to an EBITDA margin of 14 per cent. Traditionally, the fourth quarter is not Norman s strongest in terms of revenue growth and profits. The reduced growth rate and EBITDA margin in the fourth quarter of 2006 are partly due to seasonality, but also reflects the reorientation of the company with considerable investments starting from second half of 2006. The strategic focus areas for Norman in 2006 have resulted in the following: Norway: The negative trend in Norman s home market is reversed, a basis for future growth in Norway is set. Product: Norman s product development efforts have become more targeted and powerful through increased investments in cutting edge technology (Norman SandBox and Norman Network Protection). Technology sale: Strategic presence in California is established and several important contracts have been signed. The market for data security products and services is changing constantly, which creates new opportunities for Norman. While the number of malware attacks is on the increase, major outbreaks of single new viruses causing worldwide alarm have become rare. Computer criminals now seem to aim for financial gain by attacking in a targeted way key infrastructures and major organizations rather than creating disturbance for a large number of users. Traditional antivirus technology continues to be an attractive and a promising growth market also in the future. However, the new development towards more sophisticated attacks requires a new breed of technology to analyze and prevent targeted attacks towards large enterprises and critical infrastructures. Norman has developed a family of advanced malware analyzing tools for this purpose. Norman s SandBox is a proven world class technology in the field of scanning huge amounts of data. Suspicious files are executed in an emulated environment where they cannot do any harm to the infrastructure. In 2006, ten major organizations, national security organizations and major corporations, ran trials with the company s new, advanced Norman SandBox analyzer products. Seven of them have already signed contracts to use Norman for protecting their infrastructure and analyzing malware trends. A large number of new prospects have since entered into trials. Going forward, Norman will continue to grow in its traditional markets as well as pursuing the new opportunities created by the development in the data security sector. Norman s financial position remains strong. The company has no interest bearing debt and enjoys a positive cash flow, as described above. Total cash at year-end was NOK 78 million. The company purchased own shares amounting to NOK 40 million in 2006. The company will continue to return capital to shareholders by share buy-back program and dividend policy. At the end of 2006, Norman had tax loss carry-forwards of NOK 130 million. The company had 191 employees at the end of 2006 (183 at the end of 2005). Norman expects a continuing growth and profitability also in 2007. The company will benefit from the refocusing and investments made in 2006 and will continue to invest in both product development and the new business areas in 2007. ******************************************************************************************** Enclosed is a summary of the interim financial statements for the fourth quarter 2006. For further information, please contact Chairman of the board Svein Ramsay Goli (+47 9075 6757) or CEO Trygve Aasland (+ 47 6710 9717 or +47 4153 9717). ********************************************************************************************
Condensed consolidated interim income statement, unaudited (Figures in NOK 000) 4Q06 4Q05 2006 2005 Net revenues 65.177 62.517 252.430 231.228 Net revenues - % growth from previous year 4% 7% 9% 14% Cost of goods sold 10.167 7.092 38.494 23.425 Personnel expenses 25.608 30.500 109.051 112.438 Other operating expenses 20.634 14.809 65.310 56.997 Loss on receivables -282 98-29 984 Sub-total 56.127 52.499 212.826 193.844 EBITDA (earnings before interest, tax, depreciation, amortization) EBITDA margin 9.050 14% 10.018 39.604 37.384 Depreciation and amortization 1.116 1.078 4.563 3.959 Operating profit 7.934 8.940 35.041 33.425 Interest income 402 322 1.339 1.261 Interest expense 3 5 13 22 Profit before tax 8.333 9.257 36.367 34.664 Income tax expense/(income) 131 2.642 7.907 9.917 Profit for the period 8.202 6.615 28.460 24.747 Attributable to: Equity holders of the company 7.525 6.700 26.943 23.515 Minority interest 677-85 1.517 1.232 8.202 6.615 28.460 24.747 Earnings per share for profit attributable to the equity holders of the company Earnings per share basic kr 0.77 kr 0.64 kr 2.68 kr 2.22 Earnings per share diluted kr 0.77 kr 0.64 kr 2.68 kr 2.22
Condensed consolidated interim balance sheet, unaudited (Figures in NOK 000) 31 Dec 06 31 Dec 05 ASSETS Non-current assets Intangible assets 9.638 2.596 Goodwill 1.972 1.972 Property, plant and equipment 5.446 4.703 Deferred tax asset 33.045 35.500 50.101 44.771 Current assets Inventory 994 1.373 Trade receivables 35.304 30.793 Other current receivables 9.922 12.287 Cash and cash equivalents 77.873 83.520 124.093 127.973 Total assets 174.194 172.744 EQUITY Capital and reserves attributable to the company s equity holders Share capital 3.926 4.075 Treasury shares -154-60 Other equity *) -3.433 8.017 Other contributed equity -1.018-1.405 Cumulative translation adjustment 1.455 2.343 776 12.970 Minority interest 104 - Total equity 880 12.970 LIABILITIES Non-current liabilities Retirement benefit obligation 1.146 2.372 Other non-current liabilities - 16 Deferred income non-current 36.062 28.093 37.208 30.481 Current liabilities Trade and other payables 10.242 8.429 Current income tax liabilities 4.859 4.051 Payroll tax, VAT, social tax etc 9.535 10.503 Deferred income current 95.881 91.497 Other current liabilities 15.589 14.813 136.106 129.293 Total liabilities 173.314 159.774 Total equity and liabilities 174.194 172.744 *) After buyback of shares of NOK 40 million in 1H06. Lysaker, 24 th January 2007 Svein Ramsay Goli Chairman of the Board of Directors Norman ASA
Condensed consolidated interim statement of cash flows, unaudited (Figures in NOK 000) 2006 2005 Cash flow from operating activities Profit before tax 36.367 34.664 Depreciation and amortization 4.563 3.959 Calculation of share option costs 387 490 (Payments)/receipts for cash settlement of share option scheme - -7.529 Loss/(profit) on receivables -29 984 Loss/(profit) on sale of fixed assets 13 Payment of tax -4.723-2.037 Changes in assets & liabilities Accounts receivable -4.471-9.912 Inventory 379-804 Other operating assets / liabilities 7.390 2.671 Accounts payable 1.813 558 Net cash flow from operating activities 41.689 23.044 Cash flow from investing activities Payments for purchase of long term assets -12.307-4.477 Net cash flow from investing activities -12.307-4.477 Cash flow from financing activities Payment of dividend - -39.692 (Payments)/receipts for (purchase)/sale of own shares -40.005-9.115 Receipts on loan related to Ibas demerger 4.000 4.000 Net cash flow from financing activities -36.005-44.807 Effect of foreign exchange rate changes 976-1.062 Net changes in cash & cash equivalents -5.647-27.302 Cash & cash equivalents as at period start 83.520 110.822 Cash & cash equivalents as at period end 77.873 83.520
Condensed consolidated interim statement of changes in equity, unaudited (Figures in NOK 000) Share capital Treasury shares Other contributed equity Other equity Cumulative transl. adjustment Minority interest Total equity Balance as at 31.12.04 4.075-5.634-7.771 1.434-3.372 Reinstatement of negative minority interest - - - 2.697 - -2.697 - Balance as at 1.1.05 4.075-5.634-5.074 1.434-2.697 3.372 Currency translation differences - - - - 909 96 1.005 Net income/(expense) recognized directly in equity - - - - 909 96 1.005 Profit for the year 2005 - - - 23.515-1.232 24.747 Total recognized income for 2005 - - - 23.515 909 1.328 25.752 Purchase of treasury shares - -60 - -9.055 - - -9.115 Employee share option scheme; value of services provided - - 490 - - - 490 Employee share option scheme; cash settlement - - -7.529 - - - -7.529 - -60-7.039-9.055 - - -16.154 Reclassification of negative minority interest - - - -1.369-1.369 - Balance as at 31.12.05 4.075-60 -1.405 8.017 2.343-12.970 Reinstatement of negative minority interest - - - 1.369 - -1.369 - Balance as at 1.1.06 4.075-60 -1.405 9.386 2.343-1.369 12.970 Currency translation differences - - - - -888-44 -932 Net income/(expense) recognized directly in equity - - - - -888-44 -932 Profit for the year - - - 26.943-1.517 28.460 Total recognized income for 2006 - - - 26.943-888 1.473 27.528 Sale/(purchase) of treasury - -243 - -39.762 - - -40.005 shares Reduction in share capital by cancellation of treasury shares -149 149 - - - - - Employee share option scheme; value of services provided - - 387 - - - 387-149 -94 387-39.762 - - -39.618 Balance as at 31.12.06 3.926-154 -1.018-3.433 1.455 104 880
Notes to the condensed consolidated interim financial statements, unaudited Note 1: Reporting entity Norman ASA (the Company ) is a company domiciled in Bærum, Norway. These December 2006 condensed consolidated interim financial statements of Norman ASA and its subsidiaries (together the Group ) are for the twelve months ended 31 December 2006. The consolidated financial statements of the Group as at and for the year ended 31 December 2005 are available upon request from the Company s registered office at Strandveien 37, Lysaker, or at www.norman.com. Note 2: Statement of compliance These condensed consolidated interim financial statements of Norman ASA Group have been prepared in accordance with rules and regulations from Oslo Stock Exchange and International Financial Reporting Standard (IFRS) IAS 34, Interim Financial Reporting. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 31 December 2005. These condensed consolidated interim financial statements were approved by the Board of Directors on 24 January 2007. Note 3: Significant accounting policies These condensed consolidated interim financial statements have been prepared under the historical cost convention. They have been prepared under the same accounting principles as those set out in the consolidated financial statements of the Group as at and for the year ended 31 December 2005. Note 4: Estimates The preparation of interim financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing these condensed consolidated interim financial statements, the significant judgments made by management in applying the Group s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 31 December 2005. Note 5: Segment reporting IAS 14 requires segmental reporting on both a primary and secondary basis. Business segment is the primary reporting format for the Group, as products and services represent the predominant source and nature of risks and returns. Norman is a niche company specializing in development, marketing and sales of data security software products and operates only within one primary segment. Norman s secondary segment is geographical segments. The geographical split of net revenues, total assets and capital expenditures is as follows: Norway*) Other Europe North America (Figures in NOK 000) 4Q06 4Q05 2006 2005 4Q06 4Q05 2006 2005 4Q06 4Q05 2006 2005 Net revenues 13.867 14.564 54.635 55.036 48.905 44.802 185.901 161.959 2.405 3.151 11.894 14.233 Total assets 82.807 89.591 88.815 80.454 2.572 2.699 Capital expenditures 4.749 343 10.292 1.945 223 335 1.972 2.424 17 36 43 108 *) Transactions with Group companies are eliminated
Notes to the condensed consolidated interim financial statements, unaudited Note 6: Income statement analysis Expenses can be presented either by the nature of expenses or by their function. Norman has decided to classify expenses by nature on the face of the income statement, but will for information purposes also specify expenses by business function. (Figures in NOK 000) 4Q06 4Q05 2006 2005 Net revenues 65.177 62.517 252.430 231.228 Net revenues - % growth from previous year 4% 7% 9% 14% Cost of goods sold 10.167 7.092 38.494 23.425 R&D expenses 7.966 8.974 31.699 31.369 Sales expenses 29.182 27.543 110.563 105.167 Marketing expenses 4.767 3.667 14.165 12.468 G&A expenses 4.327 5.125 17.934 20.431 Loss on receivables -282 98-29 984 Sub-total 56.127 52.499 212.826 193.844 EBITDA EBITDA margin 9.050 14% 10.018 39.604 37.384 Depreciation and amortization 1.116 1.078 4.563 3.959 Operating profit 7.934 8.940 35.041 33.425 Note 7: Intangible assets During fourth quarter 2006, Norman has capitalized NOK 3.7 million in development costs related to the development of new products (2006: NOK 7.6 million). In addition to high development activities in fourth quarter related to new products, the capitalization of development costs in fourth quarter also includes development costs incurred in previous quarters in 2006 (NOK 2,5 million). This is based on a renewed assessment of the development activities and the associated costs in order to comply with IAS 38. Note 8: Reclassification of other financial income/expenses Other financial income/expenses as previously presented in the quarterly reports in 2005 have been reclassified in the 2005 comparable figures from financial items to other operating expenses (and to G&A expenses in note 6) to comply with the IFRS requirements (this principle was applied in the 2005 annual report, but not in the quarterly reports in 2005).
Quarterly developments Quarterly net revenues yoy (MNOK) 70 70 65 60 55 Net revenues (MNOK) 62,5 63,5 62,9 56,2 56,7 55,8 60,8 65,2 65 60 55 50 45 46,7 56,2 63,5 48,1 56,7 62,9 49,8 55,8 60,8 58,3 62,5 65,2 50 40 1Q04 1Q05 1Q06 2Q04 2Q05 2Q06 3Q04 3Q05 3Q06 4Q04 4Q05 4Q06 Gross profit margin EBITDA (MNOK) 95 % 90 % 90 % 89 % 92 % 89 % 15 10 8,9 6,5 12,3 10,2 10,0 9,5 11,0 9,1 85 % 84 % 86 % 85 % 84 % 5 80 % 0 EBIT (MNOK) Norw ay revenues (MNOK) 15 10 5 8,0 5,6 11,3 9,2 9,0 8,4 9,7 7,9 15 14 13 12 13,9 14,0 12,7 14,6 14,1 14,1 12,6 13,9 0 11 Other Europe revenues (MNOK) North America revenues (MNOK) 60 50 40 30 20 10 0 44,8 46,2 45,8 45,0 48,9 38,3 39,1 39,8 5 4 3 2 1 0 4,1 3,7 3,3 3,2 3,3 3,0 3,2 2,4