Annual report 2009 n Enea is the world’s third-largest vendor of realtime operating systems (RTOS). RTOS have more stringent demands for precision, performance and predictabi- ENEA in brief lity than operating systems on PCs. n Over its 40-year history, Enea has become one of the Enea offers solutions which enhance competitive- leading companies in the field of technical consul- ness for customers who develop products driven tancy services. The consultancy field is now a separate by communications. These solutions consist of ad- business area, which in 2009 represented 56 percent vanced realtime operating systems with supple- of revenue. Software, Enea’s other business area, re- mentary software and services, as well as technical presented 44 percent of revenue. consultancy services for product development over Omsättning n The long-term demand for Enea´s products is driven the entire life cycle. Enea employs more than 600 2009 777,7 2008 917,6 by two strong trends. The first is that an increasing employees in Europe, North America and Asia and 2007 820,6 2006 750,1 number of products[Diagram] contain built-in intelligence, while had a turnover of SEK 777.7 million for 2009. 2005 726,2 1000the other is that Rörelseresultatmore and 80more products are com- 2009 -4,1 municating with one2008 73,1 another. For both trends, the use 2007 72,1 65 800 of realtime operating2006 67,6 systems and related services is a 2005 56,4 prerequisite. 50 600 35 400 20 200 5 Revenue,0 MSEK -10Operating profit, MSEK Contents Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 1,0001000 8080 1000 80 n A word from the CEO 4-5 800800 6565 800 65 n Strategies 6-9 5050 50 n Software 10-15 600600 600 3535 35 n Consulting 16-21 400400 400 2020 20 n The share 22-23 200200 200 5 5 n Board of Directors’ report 24-29 0 –10-10 0 -10 n Income statement 30 [Diagram] 200505 2006 06 200707 2008 08 200909 200505 2006 06 2007 07 2008 08 2009 09 n Balance sheet 31 Försäljning per aärsområde 2009 Consulting 56% Software 44% n Cash flow statement and equity 32 Sales by business area Sales by segment n Parent company 33-35 42 % 32 % Telecom Mobile units n 44 % infra- Notes 36-50 Software structure enheter Mobila infrastruktur 32% 32% n 44% Telecom Auditor's report 51 Software 42% n Five-year review 52 56% n Corporate governance report 53-56 Consulting 8 % n Board of Directors 57 56 % Aero / Flyg/försvare Consulting 18 % defense 8% n Executive Management Team 58 Other övrigt n 18% Annual General Meeting 59 Övrigt 18% Övrigt Flyg/försvar 8% Flyg/försvar Mobila enheter 32% enheter Mobila Telekom infrastruktur 42% infrastruktur Telekom Försäljning per segment 2009 segment per Försäljning [Diagram] 300 250 200 150 100 50 Net sales per quarter 0 Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 MSEK 300300 250250 200200 Year in brief 150150 10015100 105050 5 00 0 Q1Q1 Q2 Q2 Q3 Q3 Q4 Q4 -5 = 2008 = 2009 -10 -15 Operating-20 profit before non-recur- Q1 ring itemsQ108 Q208 per Q308 quarter Q408 Q109 Q209 Q309 Q409 Over the first quarter, Enea makes a loss which turned out to be MSEK the starting point for a range of improvements and adjustments over the rest of the year. A new Chairman and a new President 1515 are appointed; greater focus is placed on Enea’s future strategy. 1010 55 00 Q2 -5-5 Enea is profitable again. A cost savings program is introduced in -10-10 order to reduce the cost of development and consultancy. With -15-15 market consolidation, Enea becomes the largest independent -20-20 supplier of realtime operating systems. Q1Q1 Q2 Q2 Q3 Q3 Q4 Q4 = 2008 = 2009 Q3 Key figures A new, focused strategy is launched with two business units - Software and Consulting - with the long-term objective of ac- Key figures 2009 2008 2007 2006 2005 hieving an operating margin of 20 percent and 10 percent re- spectively. The multicore version of Enea’s operating system is Net sales 777.7 917.6 820.6 750.1 726.2 displayed to the world and receives a ”Best in show” award at the Operating profit Embedded Systems Conference. before non-recurring items 38.2 73.1 72.1 67.6 56.4 Operating profit -4.1 73.1 72.1 67.6 56.4 Q4 Operating margin, % -0.5 8.0 8.8 9.0 7.8 Average number of 666 688 547 501 509 The year ends with Enea winning its biggest contract ever, employees worth SEK 37 million. The Software business unit is well on its Earnings per share 0.24 4.90 3.88 2.66 3.81 way to achieving its long-term profit target, while the Con- sulting business unit is still feeling the effects of the difficult economic situation. ENEA – Annual report 2009 3 A word from the CEO The future Enea is taking shape The past year has been a year of adjustment for Enea on a num- tion of offering a comprehensive range of solutions, extending ber of levels. The economic downturn has meant that we have from realtime operating systems to development tools and had to adapt our business to lower demand. This has resulted middleware. One of the reasons for the company’s selection of in some 100 people leaving their jobs, and two costsaving pro- this strategy was that open source code was becoming increa- grams that we completed around SEK 65 million. But at the singly common with operating systems such as Linux. It could same time, we have also laid the foundation for a future Enea. become difficult to differentiate ourselves if the company fo- An Enea that will be a bigger, more profitable company than it cused only on operating systems. is today. Since then, the underlying technology in cellphones, base The year began with a quarter in which we reported a loss. stations and other communicating products has made a great At the same time, I was entrusted with the task of taking over deal of progress in terms of technology. It has become clear as President and CEO of the company after four years in the ex- that many different operating systems are required, with diffe- ecutive management team. In addition, Anders Lidbeck was ap- rent requirement in every product, even in products that were pointed the new Chairman of the Board. This marked the start considered to be simpler in design, such as cellphones. There of work on securing Enea’s future growth and profitability. Me- has also been a technical revolution in the field of hardware de- asures were put in place so that the company returned to profit velopment. This revolution is ’multicore’ and means that every in the second quarter. Since then, Enea has been profitable for hardware chip nowadays can contain a number of processor the remaining quarters of 2009, and at year-end the company cores. This creates entirely different demands of operating sys- reported an operating profit before non-recurring items of SEK tems than before, in terms of both scalability and performance, 38.2 million. but also in terms of backwards compatibility so that the applica- tions customers have previously developed can be reused. Two business units created Given this fact, it is natural for Enea to focus once again on Following a painstaking analysis of our market position, tech- its operating systems. Enea’s products for realtime operating nology, the competition and the needs of customers, we have systems currently represent around three-quarters of Software decided to split our company up into two business units: Soft- sales. Moreover, Enea’s basic technology is particularly suitable ware, which covers Enea’s global software business and related for multicore, which means that Enea has every chance of crea- services, and Consulting, which is made up of the consultancy ting for itself a position within a new market segment that is operations in Sweden, Romania and the USA. developing. It is thought that multicore will grow by more than The idea behind this division is to enable each respective 40 percent a year, thereby giving Enea an excellent chance of business unit to focus on its own development within its field growth. Therefore, we were able to launch our multicore version in order to improve their profits and margins. Running a glo- of our flagship, Enea OSE, in 2009. This product was received bal software business is in many ways different to running a very well and won - among other things - an award for ”Best regional consultancy business. One clear difference is in the in show” at the Embedded Systems Conference, demonstrating business models, which is reflected in the long-term targets for that we have managed to renew tried and tested technology to profitability which we have set up for the respective business allow it to meet future technical demands. areas. Software’s target is to achieve an operating margin of 20 percent, while Consulting’s target is an operating margin of 10 Consulting percent. When summing up 2009, we still have actions to imple- Enea’s roots are in consultancy. This was the business that built ment before reaching these targets. Software’s operating mar- Enea once upon a time. When realtime operating systems star- gin before non-recurring items amounted to 8 percent, while ted to show signs of major success, consultancy operations en- Consulting’s margin amounted to 2 percent. ded up being somewhat sidelined within the company.