Interim report 1 january - 30 june 2000

INTERIM REPORT 1 January - 30 June 2000 * Income before tax declined to SEK 3.7 m (25.5) * Net sales increased to SEK 166.8 m (140.3) * The average number of employees was 361 (238) * Company in Portugal acquired * Venture capital and development company Softronic Ventures established * Further development of ITM and partner agreement in the USA expanded The managing director's remarks Development during the first two quarters The second quarter, which was shorter than the first by five business days, continued with a weak earnings trend. Operating income of SEK -1.8 million for the first two quarters was encumbered by development costs of SEK -8.8 million for ITM and provisions for client projects of SEK -2.0 million. Reallocated pension funds (SPP) improved operating income by SEK 3.8 million. In addition to operating income, net financial items of SEK 5.6 million includes achieved earnings of SEK 5.0 million on financial investments. Staffing for project consultants was 55% (including development of ITM), about 10 percent lower than last year. A number of major projects delivered in late 1999 have yet to be replaced with new sales of equal value. The assessment is that complexity of procurement and development has delayed client decisions to proceed with larger investments. There is nevertheless considerable underlying demand for consultant services within eBusiness, as shown by a higher number of outstanding tenders, among other factors. This year Softronic, like many other IT consulting companies, was poorly positioned to meet demands within eBusiness. During the first two quarters we have altered our strategic plan to include a closer integration between IT consulting and management consulting. Organic growth has declined due to higher employee turnover, this can be partly explained by changes in our strategic plan. However, Softronic has succeeded in recruiting more than 60 new employees during the first two quarters - even more are starting in August. Softronic is well positioned for the rest of the year and will be able to capitalise on major international eBuisness projects. The positive result will be evident during the last two quarters. ITM An updated version of the insurance- and fund system has been released. ITM 3.0 contains full support for Unit Link, among other new features. In preparation for launch in the United States, the product has been adapted to the American market. A strategic alliance agreement has been closed with Scruggs Group in Dallas. The company's forecast for the first licence agreements from England and the United States during the second half, remains in effect. Organic growth Two new IT Partner units were started within Finance and Telecom during Q2. The new units will entail higher costs during Q3, but will also lead to organic growth and improved income in the fourth quarter. The company also opened Softronic Ventures in order to take full advantage of ideas and business opportunities within eBusiness and eStrategy in a separate venture capital and development company. Expansion in Europe Softronic has acquired Iberconsult, one of the leading independent management consulting companies in Portugal. The acquisition will take effect on 1 July. The company has good profitability and some 30 employees in Portugal and Spain. Two thirds of the purchase price of SEK 25 million will be paid in cash, with the remaining third paid through a directed issue. The acquisition strategy puts priority on European management consulting firms with expertise in the fields of eBusiness and eStrategy. ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2000/08/04/20000804BIT00100/bit0001.doc The full report http://www.bit.se/bitonline/2000/08/04/20000804BIT00100/bit0002.pdf The full report

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