Pandatel restructuring on schedule; first-half 2003 sales 'as expected'

14 August 2003 Hamburg, Germany Lightwave Europe -- Pandatel AG has reported that, for the first time in three trading quarters, sales rose in Q2 (April to June 2003) on the previous quarter.

Aug 14th, 2003

14 August 2003 hamburg -- Specialist provider of professional access and transmission technology for fibre-optic and copper networks Pandatel has reported that, for the first time in three trading quarters, sales rose in Q2 (April to June 2003) on the previous quarter.

In the first half (H1) of 2003, the company booked sales of EUR 8.9 million, compared with EUR 15.2 million for the same period in 2002. Owing to the weak sales, the company reported a loss of EUR 2.4m, compared with a profit of EUR 0.7m 12 months before.

The loss before tax came to EUR 3.6 million, the first half of 2002 closed with EBT of EUR 1.2 million. The company said that "as expected" its cost-cutting agenda has not yet favourably influenced earnings.

Nevertheless, Pandatel is looking to the future with optimism: following the consolidation phase predicted to kick in this year the Management Board anticipates that as of 2004 sales will rise and Pandatel will return to profit.

The company says it has a sound capital base with its own funds at 94.5% of total assets, as well as cash and cash equivalents that have grown from EUR 11.7 million in H1 2002 to EUR 25.5m, putting the company in a position to survive current weak phases in the network equipment market.

Market capitalisation has increased appreciably with the rally in technology stocks. At the end of July 2003, having climbed steadily the Pandatel equity reached a new high for the year of EUR 4.59, followed by a brief bout of profit-taking.

Weak dollar and SARS
Pandatel has had to absorb sales decreases worldwide that were largely in line with expectations by market pundits. There were numerous reasons for the poor sales: Alongside the general weakness in unit sales among telecom equipment providers, the SARS outbreak dampened what had until then been a positive business trend in Asia, pandatel reports.

The US market, which was "stuttering anyway", suffered from the falling US dollar against the euro, which Pandatel considers a longer-term phenomenon. The EMEA region tended to be uneven. The proportion of intra-Group sales rose from 10% in H1 2002 to 13.1% this year.

Restructuring
Pandatel is by no means dissatisfied with H1 2003, as the company has made some important changes, while others are still underway. The company is implementing a "three-prong strategy" for profitable growth.

The Management Board has divided the Sales section into teams and introduced key account management, the strain on the Development section has been eased by outsourcing, and various possible acquisitions are being assessed.

CEO Heinrich-J. Kraus is therefore confident that the key structural changes will all be successfully completed before the year is out: "This is a crucial year for Pandatel. We have kicked off the necessary changes and have made swift progress with them.

"For example, the sales team members are being trained for a new role as expert consultants for network solutions. We are convinced that in the foreseeable future we will find suitable takeover candidates, enabling us to generate additional growth."

Pandatel AG is an internationally active specialist provider of professional access and transmission technology for fibre-optic and copper networks. Since November 1999, the company has been listed on the Frankfurt Stock Exchange, and since January 2003 in the latter's new Prime Standard segment (ISIN DE 000 691 630 7). There are some 170 employees at the Hamburg head office, in its two subsidiaries. The company's three representative offices support clients in 90 countries.

The full interim report for H1 2003 is available for inspection.

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