Financial Statement - Second Quarter 2003

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PROFIT AND LOSS ACCOUNTSecond QuarterAccumulatedFull Year
(Figures in TNOK)20022003200220032002
Revenues, PC/Desktop3 5343 9719 6739 43417 499
Revenues, Internet Devices10 12915 27715 60322 25333 561
Total Operating Revenues13 66319 24825 27631 68751 060
Payroll and related expenses9 37910 02220 48923 23547 016
Depreciation and amortization8118031 6111 5733 118
Other operating expenses5 1526 25410 27311 06122 307
Total operating expenses15 34217 07932 37335 86972 441
Operating result-1 6792 169-7 097-4 182-21 380
Net financial items-323193-267198857
Result before taxes-2 0022 362-7 364-3 983-22 237
Taxes560-7711 8428956 035
Ordinary result-1 4421 591-5 522-3 088-16 202
BALANCE SHEET30-June31-Dec
(Figures in TNOK)200220032002
ASSETS   
Intangible assets21 09125 65026 394
Tangible assets2 6801 3372 041
Other current assets13 04921 50411 473
Cash and cash equivalents7 40034 0979 016
Total assets44 22082 58848 924
LIABILITIES & EQUITY   
Equity37 31574 96626 506
Long-term liabilities000
Short-term liabilities6 9057 62222 418
Total liabilities & equity44 22082 58848 924
CASH FLOW STATEMENTSecond QuarterAccumulatedFull year
(Figures in TNOK)20022003200220032002
Ordinary profit before taxes-2 0022 362-7 364-3 983-22 237
Net cash flow from operating activities-1 220-13 407-5 687-12 664-23 195
Net cash flow from investment activities-1480-1870-548
Net cash flow from financing activities4 00041 7284 00041 72815 850
Net change in cash and cash equivalents-63030 683-9 508-25 081-7 893
INTERIM RESULTSQ1Q2Q3Q4Q1Q2
(Figures in TNOK)200220022002200220032003
Total operating revenues11 61913 66311 98413 79412 43919 248
Operating result-4 576-2 490-7 934-6 381-6 3512 169
Sales growth quarter by quarter (%)30.0%17.6%-12.3%15.1%-9.8%54.7%
Pre-tax earnings per share (NOK)-0.074-0.046-0.127-0.114-0.0830.019
Pre-tax earnings per share (NOK) fully diluted-0.070-0.044-0.101-0.090-0.0680.016

Note: The quarterly financial statement is based on the same principles as the annual accounts.

Highlights

Financials

Operating revenues in the second quarter of 2003 ("2Q03") was MNOK 19.2 compared with MNOK 13.7 in 2Q02 increasing by 40.9% on a year-to-year basis. Accumulated revenues for the first half of 2003 were MNOK 31.7 compared to MNOK 25.3 for the same period last year, a growth of 25.4%.

The operating profit in 2Q03 was MNOK 2.2, compared to an operating loss of MNOK -1.7 in 2Q02. Accumulated operating loss for the first half of 2003 was MNOK -4.2 compared to MNOK -7.1 for the same period last year.

Income from embedded products was MNOK 15.3, up from MNOK 10.1 in 2Q02. Income from PC/Desktop was MNOK 4.0, up from MNOK 3.5 last year.

The operating costs increased from MNOK 15.3 in 2Q02 to MNOK 17.1 in 2Q03, a growth of 11.3%. Accumulated operating costs for the year was MNOK 35.9 compared to MNOK 32.4 during the same period last year, a growth of 10.8%.

Cash and cash equivalents was MNOK 34.1 at the end of .2Q03.

Embedded

The income from embedded products grew from MNOK 10.1 in 2Q02 to MNOK 15.3 in 2Q03, a growth of 50.8%

Since the launch of the Small Screen Rendering browser ("SSR") late last year, Opera's smartphone edition has showed promising progress in the marketplace. Key players in the industry have already signed up to include Opera's full Web browser on their smartphones. Existing partners among handheld manufacturers include SonyEricsson and Kyocera.

Opera is in dialogue with several of the leading mobile phone manufacturers that is considering using Opera's SSR on future product lines. The Company expects Opera's SSR technology to be included on mass-market handsets launched in the second half of 2003 with several other phones to follow in 2004.

Opera has over the last year been working directly towards the mobile operators to deliver a branded browser that is integrated into the phone user interface. Opera believes that this will help the operators to market their own content and services, thereby increasing customer loyalty and average revenue per user (ARPU).

The first agreement with an operator, Optimus of Portugal, was announced in June. Optimus is the first operator that chooses to differentiate its smartphones by including Opera as default on Nokia 3650.

In the prospectus dated 25. April, the discussion with Canal+ Technologies ("C+T") was listed as a potential legal dispute. The disagreement has now been resolved. C+T will finance Opera's port of the browser to C+T's middleware MediaHighway.

PC/Desktop

Income from PC/Desktop grew from MNOK3.5 I 2Q02 to MNOK 4.0 in 2Q03, a growth of 12.4%.

Advertising income has been lower than expected. The cooperation with Advertising.com has not worked according to plan, and Opera is now considering several alternative advertising income models.

Although the number of downloads and installations has continued to increase, the number of users buying desktop licenses is stable compared to last year. The company is considering alternative strategies to increase license revenue on the desktop product line.

During the first seven months of 2003, more than 10 million users downloaded the free ad-sponsored desktop version.

Organization

As of 30. June, the company had 122 employees (115.5 man-labour years), compared to 125 employees by the end of June 2002 and 120 employees by the end of 1Q03.

The Company foresees further organisational growth in the second half driven by increased number of projects financed by customers. Growth will be demand-driven and new employees will mainly be working within the development, quality assurance and documentation departments.

Outlook

As an increasing share of mobile phones get high resolution colour screens and higher memory capacity, phone manufacturers are focusing on including new software applications to improve the user experience to increase loyalty and revenues for operators on mobile phones.

As mobile phones are becoming increasingly advanced, Opera believes that most mobile phone manufacturers are investigating the opportunity of replacing today's WAP with Internet as we know it from our PCs, using HTML.

Opera believes it is better positioned than ever before to become a leading player in the market for HTML browsers on mobile phones.

The Company believes it will be included on mass-market hand-sets launched in the second half of 2003 with several other phones to follow in 2004. Still, most of the income on Internet devices is expected to be R&D related this year. We do not expect a substantial growth in license income before 2004.

The level of activity within the digital television industry is still relatively low. Although we believe that the Opera browser will be included on several set-top boxes in the short to medium-term, mass market adoption will take more time. We continue to believe that Opera has a leading solution for this sector and that the long term income potential is substantial.

Shareholder and equity related issues

The Company raised NOK 3.603.325 in a private placement in May, issuing 1.441.330 shares at NOK 2,50 per share. The offering followed the private placement in March of NOK 38.125.000 and was targeted towards existing shareholders who were given the same terms as the investors that subscribed in the March offering.

The convertible loan of MNOK 11.85 taken up in September 2002 was converted into shares in May, issuing 6.319.997 new shares. As part of the loan agreement, the lenders have been granted a number of warrants equal to the numbers of shares received after the conversion. The maturity of the warrants is two years from the date of the conversion.

As of June 30, the total number of outstanding shares totalled 84.652.747

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Erik Carson Harrell
CFO
Tel: +47 24 16 40 53

Petter Lade
Investor Relations Manager
Tel: +47 24 16 44 44

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D&B Business Report Rating - AAA

D&B Business Report Rating - AAA