Demand for e-business services is increasing and Adera is well-positioned

Demand for e-business services is increasing and Adera is well-positioned In January, in a survey of 277 companies, Adera was named the best Web consulting company in Sweden. This mark of quality has begun to yield results. During the quarter we have obtained a number of new clients, as a result of this survey. The survey has also been the cause of great pride within the Company and has contributed to the recruiting of new, skilled employees. For example, we are currently receiving 250 job applications per month in our Stockholm office alone. Adera's Group management was changed as of March 1, 2000. Adera acquired a new president and chief executive officer; responsibility for operations in Sweden and the rest of Europe was divided between two persons; responsibility for public relations and investor relations was given priority; and responsibility for continuing growth in information technology and market communications was defined clearly. Adera gained a large number of new and attractive clients during the quarter. Most of the assignments involve complete e-business solutions covering the entire chain from strategy to technical platforms and market communications. Moreover, many of these assignments are for multinational companies, and our presence in the large European markets has been important for these clients. We have also increased our earlier assignments for a number of clients in the direction of assuming greater total responsibility. We have introduced a large number of technically advanced e-business solutions for companies such as Compaq and Peak Performance, among others. We are working on 15 projects for Telia at the present time. The management of Wallenius-Wilhemsen Lines was so pleased with the e-business strategy that we developed jointly with them that they wrote a very positive letter of recommendation as evidence of our in-depth business-strategy expertise. We have carried out a number of projects- for ESAB, Peak Performance and SKF Sverige, for example - in which we were able to demonstrate our creative ability. We have made a number of new acquisitions. Most of them were implemented toward the end of the quarter and during the early part of April, with the result that we cannot include sales and earnings attributable to these acquisitions in Group totals until the second quarter. The acquisition of OOPix and ITage is strengthening our IT expertise in the Stockholm area where, following these purchases, we now have nearly 200 consultants. The acquisition of HCM, the Netherlands' leading e-business agency, strengthened our geographical presence in the Benelux region and provided us with a large number of new clients, as well as new expertise and management skills. As a result of the acquisition of GCI Interactive, we are now the leading consulting company in the Nordic Region in the field of interactive public relations based on use of the Internet. The ability to build "structural" capital is critically important for future profitability and Adera intensified this work during the quarter. We have packaged experience gained from a number of client projects and have created eCore, a sturdy and flexible platform that can be used to develop advanced e-business systems quickly and efficiently. A large number of organisational and managerial improvements have been implemented since the new Executive Group took office at the beginning of March. Among other moves, we decided to close our office in Dallas since it does not meet the profitability demands we set for the future. The United States is still a very important market for us since many of our clients operate globally. We are working actively with one of the large high-quality consulting firms to find a solution regarding representation in the US. I expect that during the next half-year we will continue to take a number of major steps to strengthen our competitiveness and organisation. In the wake of the changeover to the new millennium, demand was relatively weak during January but since then has increased by stages in both Sweden and the rest of Europe. Our Swedish consulting offices were profitable during the quarter and March, in particular, was very strong. Our offices in the rest of Europe also had good order bookings during March. Sales during the January-March period amounted to SEK 86 M and agency revenue (sales less purchases for customers) totalled SEK 70 M. Agency revenue was 63% higher than in the year-earlier period. Before amortisation of goodwill and items affecting comparability (the liquidation of the Dallas office), Adera incurred a loss of SEK 8.6 M. It is interesting to note that pro forma -- including proposed acquisitions, assuming that all of the acquisitions are approved by Adera's shareholders -- sales would have amounted to SEK 172 M, agency revenue would have totalled SEK 106 M, and the loss before amortisation of goodwill would have been SEK 0.9 M. Earnings targets established earlier remain valid. This means that our objective this year is to achieve break-even results before amortisation of goodwill and items affecting comparability, while we expect to have a profit margin between 10% and 15% within two to three years. These targets may be affected by the increased tempo of programs outside Sweden. The e-business revolution has only begun. More and more corporate managements are beginning to explore what they can and should do in the e- business sector in order to further strengthen their competitiveness. E- business is beginning to become a matter for consideration by top management in many large companies. Adera has a number of priority areas for action in the future in order to maintain a "top-quality" position: continue to deliver high quality performance to clients, recruit and develop skilled employees, continue to strengthen our geographical presence in key markets, and continue to build the company's structural capital. Göteborg, May 5, 2000 Jörgen Ericsson Chief Executive Officer Adera AB (publ) Adera AB (publ)Interim Report Three months ended March 31, 2000 Amounts within parentheses pertain to first-quarter 1999 operations @ Agency revenue increased by 66%, to SEK 64.1 M and sales for the January-March period of 2000 rose to SEK 86.3 M, an increase of 21% compared with the corresponding period of 1999. @ The Group had 380 employees in March 2000, compared with 320 in December 1999. Including the additional acquisitions that have been made, plus our organic growth, the Group had slightly more than 500 employees at the end of April. @ Adera incurred a loss of SEK 8.6 M before amortisation of goodwill and items affecting comparability, compared with a loss of SEK 9.8 M in the 1999 period. Amortisation of goodwill amounted to SEK 2.4 M and costs related to the liquidation of Adera Inc, amounted to SEK 11.8 M. @ Pro forma -- including the acquisitions of HCM, OOPix, ITage and GCI Interactive -- sales in the first quarter of 2000 would have amounted to SEK 172 M, agency revenue would have been SEK 100 M and the loss before amortisation of goodwill and items affecting comparability for the period would have been SEK 0.9 M. Good demand for e-business services during the last part of the quarter Adera named Sweden's best Web consulting firm Vision magazine and the Swedish Advertisers Association conducted the "Client's Choice 2000" survey in January 2000. Two hundred and seventy- seven buyers of Web services -- presidents, marketing managers and IT managers -- were asked to evaluate Web consultancies based on the criteria of creativity, strategic expertise and customer respect. The results speak for themselves: 1.Adera 4. Cell Network 2.Razorfish 5. Framfab 3.Icon Medialab 6. WM-data Vision writes: "The attention that Adera receives in "Client's Choice 2000" is sensational...Adera's breadth inspires respect...The combination of strategic communications know-how and client respect makes Adera the clients' favourite... Adera has made a strong impression on information managers and IT managers, who credit the agency with a uniformly positive trend and who, in many cases, are also following the agency with a view to possible co-operation." The result has been that a large number of new clients have chosen Adera as a partner, while existing clients have increased the scope of their assignments. A good example is Telia, which retained Adera to renew the Telia.se and Telia.com websites. The world's first WAP service for hotel reservations Adera has worked with Scandic Hotels for some time with a view to helping the hotel chain to strengthen relationships with its 370,000 club members, in part through use of the Internet. As part of this program, Scandic recently introduced the world's first WAP (Wireless Application Protocol) service for hotel reservations. Adera built the application, Nocom is responsible for operations and software, while Nokia supplied telephone and server technology. Two-year contract with Peak Performance Peak Performance has become one of Scandinavia's largest brands in the area of sports and recreational wear in a very short time. Adera has signed a two-year contract that comprises global campaigns and brand-name development in all media: websites, including e-business; store visualisation, sponsorship and special events. Complete e-business for Wallenius Wilhelmsen Lines The world's largest ro/ro shipping company has chosen Adera as its partner to develop a global Web strategy for the recently merged Norwegian/Swedish company. The strategy, which was completed within two months, resulted in specific action plans that are now being implemented throughout the world. In a letter of recommendation written on its own initiative, WWL's management expressed its satisfaction with the very high quality of the project and the fact that all time and cost specifications were met in accordance with agreements. Approximately 35 consultants in Adera's offices in Oslo, Stockholm, Göteborg and Värnamo are working on an integrated e-business project that involves overhauling WWL's business processes, building new intranet and Internet systems and working on a new brand-name strategy and proposals for WWL's market communications systems. Increased number of Telia assignments In October 1999 Adera was named one of Telia's seven contract suppliers of Internet services. Since the beginning of the year this has resulted in a large number of assignments in more and more areas of Telia's expertise. During the first quarter Adera was designated a partner in the launching of new versions of the Telia.se and Telia.com websites. Telia's websites are among the most frequently used in Sweden, with approximately 600,000 individual visitors per month. Delivery of the new sites met -- and in some cases exceeded -- agreements with respect to time, quality and cost specifications. Increased activity for Compaq With Adera as a partner, Compaq EMEA (Europe, Middle East and Africa), which is based in Munich, has developed Internet-based business systems that are radically improving the company's work processes and integrating those of suppliers. During the quarter, based on its proprietary ECORE platform tool, Adera developed a new version of the business system, which, among other features, permits automatic generation of all of Compaq's production of printed materials. New clients in Denmark During the spring the Adera office in Copenhagen has been awarded a large number of new client contracts on which work will begin in the second quarter. Two of the contracts, involving Madge.web and Vanenburg Group. Madge.web is a European-based company that develops network structures and applications services for, primarily, multinational financial and media companies. The assignment comprises the development of database systems, websites and e-business solutions. For Vanenburg Business Solutions, Adera is developing a Group website that is to be rolled out in 15 countries, as well as a brand name strategy for the new economy. New clients in Belgium The Adera office in Antwerp has extended co-operation during the first quarter with KPN, Orange, TeleAtlas, SAIL, AS Adventure and the Canada- based company OmniMark Technologies Corporation. Together with OmniMark, Adera recently started a development project to serve customers with e- commerce solutions, intranet and extranet solutions, IT strategies and WAP solutions. OmniMark has about 1,500 well-known customers, such as Microsoft, Boeing, Hewlett Packard, Volvo and the EU Parliament. Emphasis on building structural capital Adera introduces eCore -- an IT platform for advanced Web development Because a presence on the Internet is a most important competitive tool for many clients, demand for speed and advanced functions in the development of websites have also increased substantially. Many companies have to be able to globalise their websites quickly, offer information in real time and in a number of languages, and use information from the sites in both their intranets and extranets. In order to offer an advanced tool and a platform for a company's entire operations on the Internet, Adera has developed eCore, a platform that meets all of the demands noted above. Many new acquisitions New shares issued to permit fast pace of continuing expansion Following a road show of more than a week in Sweden, England and the United States, Adera's new issue of 2.5 million shares was fully subscribed. Two thirds of the newly issued shares were placed with large investors outside Sweden. The subscription price was set at SEK 171 per share, resulting in proceeds of SEK 427.5 M to Adera, before issue costs. The purpose of the issue was to provide Adera with funds for continuing expansion in Europe, and to increase institutional ownership of the Company's shares. Adera acquires HCM/BAM -- the Netherlands' largest e-agency In February, Adera signed a contract to acquire Hollandse Communicatie Maatschap (HCM) in Amsterdam, as well as the outstanding majority holding in Bureau Actie Marketing BV (BAM). In 1999 HCM had agency revenue of SEK 80 M, and operating income of SEK 12 M before financial income and expenses. HCM currently has approximately 100 employees and, like Adera, has focused largely on integrating market communications, information technology, the Internet and management expertise in order to be able to offer creative and durable e-business solutions in the new economy. The Netherlands, like Sweden and Finland, is one of the fastest-growing e- business markets in Europe. The penetration rates for personal computers, Internet connections and mobile telephony are very high and consulting operations in the e-business sector are today one of the hottest growth areas in the Netherlands. HCM's client list contains a number of well-known brands; these include Sony (Europe), Boxman.com, Sportus.com, VNU (publisher), Travel Union Int (travel agency) and a large number of other attractive Dutch companies. Adera is devoting substantial resources to minimising the time required for integration, and HCM will become a very important part of Adera's continuing expansion in Europe. The company is expected to be consolidated in the Group as of April 1, 2000. Adera buys GCI Interactive GCI Interactive was a Web agency consisting of slightly more than 30 employees, with clients mainly in the areas of health care and pharmaceuticals, information technology, industry and fast-moving consumer goods. Notable clients include Microsoft and Pharmacia & Upjohn. The agency was formerly owned in part by the GCI Rinfogruppen public relations consulting company, which is part of Grey's global GCI public relations network. The acquisition strengthens Adera's customer base, its knowledge of public relations on the Internet, and its presence in Stockholm. The price for GCI Interactive, SEK 57.3 M, was paid with 71,334 Adera Series B shares. GCI had sales of SEK 18.3 M in 1999 and reported an operating loss of SEK 0.8 M before financial items. Adera closes Dallas office Adera's office in Dallas was associated very closely with the Olicom account, a client that split up and sold large parts of its business during the second half of 1999. Following substantial efforts to attract new clients to the office, we saw that it would not be possible for the office to meet our profitability goal in the foreseeable future. It was therefore decided to close the office and -- in accordance with Adera's strategy -- concentrate on strong, profitable expansion in Europe. The United States is still an important market but should preferably be cultivated via a partnership with a large established American company. The effect of the closure is reported as an item affecting comparability in the amount of SEK 11.8 M. New Chief Executive Officer and Executive Committee New President and Chief Executive Officer as of March 1, 2000 Jörgen Ericsson was named the new President and Chief Executive Officer of Adera, effective March 1, 2000. Following six years with McKinsey & Company -- including three years as manager of e-business activities for McKinsey in Scandinavia -- Jörgen Ericsson has broad experience in consulting. The former President and Chief Executive Officer, Rolf Jansson, will remain on Adera's Board and work actively in Adera Venture Zone. Adera strengthens its Executive Committee In March, to ensure continuing strong growth, Adera reinforced its Executive Committee by adding four new members. Following the change of Chief Executive Officers on March 1, the new Executive Committee consists of the following: Jörgen Ericsson President and Chief Executive Officer Richard Törnblom Vice President - Responsible for operations in Europe Henrik Martin Vice President - Responsible for Swedish operations Claes-Göran Lövetoft Vice President - Responsible for technology and integration Johan Kruse Vice President - Responsible for brand names and marketing Janerik Dimming Vice President - Information Manager Per Malmström Chief Financial Officer Options program and stock split Redemption of options program Adera's first options program expired in January 2000, resulting in a new issue after the split of 2,000,000 new Series B shares. Group liquidity was thereby increased by SEK 24 M. Five-for-one stock split Shareholders at a Special General Meeting on February 15 approved a five- for-one split of the Company's shares. Important events following the end of the quarter Ola Ahlvarsson elected new member of Adera's Board Ola Ahlvarsson was elected a member of Adera's Board of Directors at the Annual General Meeting of the Company. Ola participated in the founding of Boxman.com and Result Venture Knowledge, of which he is today the Chief Executive Officer. With his large network of international contacts and his experience gained in the new economy, Ola will be a very great asset on Adera's Board of Directors. Adera acquires Itage With its purchase of the system integrator ITage - a consulting company that focuses on e-business and knowledge management - Adera is strengthening its program to provide solutions using third-party products. ITage has established joint ventures with such companies as Abalon, Cognos, IFS and Nocom and is thus an established supplier of total solutions for large and medium-size European companies. As a result of its many partnerships, ITage is able to integrate standardised components with a view to creating competitive advantages for its clients, which include NCC, Elektronikgruppen, ABB and Pocketmail. As of the date when it was acquired, ITage had 23 employees, with sales of SEK 11.5 M in 1999. ITage had profit of SEK 0.8 M after financial items in 1999. The company is expected to be consolidated in the Group as of April 15, 2000. Adera acquires OOPix OOPix offers active support and resources in object-oriented systems development. The scope can be everything from participating in a project to changing of an entire development process, from IT support and operations. OOPix customers include Scania, SAS, Telia, Sweden Post, Swedish Railways and Ericsson. OOPix has leading-edge know-how in object- oriented technology and works, for example, with Java, Corbra and various application servers. As of the date when it was acquired, OOPix had 25 employees, with sales of SEK 24 M in 1999. OOPix had income of SEK 1.7 M after financial items in 1999. The company will be consolidated in the Group as of May 1, 2000. ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/2000/05/05/20000505BIT00930/bit0001.doc The full report http://www.bit.se/bitonline/2000/05/05/20000505BIT00930/bit0002.pdf The full report