Merged Cell Network/Mandator report good profitability

Merged Cell Network/Mandator report good profitability The merged Cell Network and Mandator companies report pro forma net sales of SEK 380.1 M for the first quarter of 2000. Gross earnings before interest, tax and amortization (EBITA) amounted to SEK 42.1 M, equal to a margin of 11.1%. Income after financial items amounted to SEK 21.1 M. "This shows that we have a strong foundation upon which to continue to expand," says Marcus Bäcklund, president and chief executive officer of Cell Network. "We see good opportunities to continue to grow while maintaining good profitability. It is also gratifying to note that Cell Network shareholders representing more than 90% of our equity have now accepted the merger." "Working together, we can both broaden our product line and strengthen it," says Niklas Flyborg, Mandator's president and CEO. "We have already begun to cooperate on a number of projects and we are more strongly convinced than ever that the combination of the two companies is creating a very competitive player in the global market." Background On February 8, the boards of directors of Cell Network AB and Mandator AB announced that they had decided to recommend a merger on equal terms to the shareholders of the two companies. The merger creates the largest consulting company in Europe, and one of the leaders in the world, that focuses mainly on the Internet and other interactive media. The new name of the company, which has 1,800 employees, with sales of approximately SEK 1.2 billion in 1999, will be Cell Network AB. Cell Network's leading position in the world market is additional evidence of Sweden's strong competitiveness in the new network economy. The merger is being effected through an exchange of 17 newly issued Mandator shares for each 10 Cell Network shares. Mandator's name is being changed to Cell Network. When the period for the tender of Cell Network shares expired on April 17, 2000, shareholders representing slightly more than 90 percent of the voting rights in the company had accepted the offer; the period was then extended to May 23, 2000. Reasons for the transactions in brief ¤ The merger creates one of the world's leading companies for the development of business and organizations via all the new interactive media in the global network economy. Rapid technology-driven growth is making interactive media one of the more important strategic competitive tools. Customers' operations are increasing in size and becoming more international and more complex. This in turn is imposing demands for more advanced expertise in business strategy and technology on the part of consultants. The merger is creating a "complete" supplier of integrated services -- involving strategy, communications, technology, design and content -- on an international scale. ¤ The merger is advancing the new company's position from which to continue to make rapid international growth. The new organization will have a basis of integrated expertise that will enable it to take on very large international assignments for clients. With greater financial strength and broader market coverage, the company will be able to pursue its acquisition strategy at a rapid rate. Its attractiveness in recruiting the best talent throughout the world will increase substantially. ¤ The merger offers strong "aggressive" synergies. Cell Network's strength has long been in the strategy sector related to interactive business processes. Mandator's competitive advantages consist of in-depth technical knowledge in new areas of technology and system integration, as well as its broad market coverage. The two companies complement each other effectively, especially since strategic advisory services and technical services will be demanded increasingly, and will be the key to high value- added for customers in the future. Pro forma financial statements for Cell Network/Mandator, three months ended March 31, 2000 Condensed income statements Mandator CellEliminati Adjustments Total Network on of intra- 1) group SEK M sales Net sales 269.7 118.7 -8.3 - 380.1 Gross income (EBITA)2) 35.2 8.3 - -1,4 42.1 Income 24.9 3.0 - -6,8 21,1 after financial items 1) After being adapted to Mandator's accounting principles. 2) EBITA = Earning before interest, tax and amortization The merger will be reported in accordance with the pooling of interest method. When applying this method, assets and liabilities are stated in the amounts shown in each company's balance sheet, without adjustments other than those related to the coordination of accounting principles. Thus no goodwill arises and income of the new Group will not be charged with amortization of goodwill attributable to the merger. Charges pertaining to the merger are shown as an expense in the period during which they are incurred. For additional information: Gunilla Rudebjer, Chief Financial Officer, Mandator AB, phone +46 8 402 31 83, mobile +46 709 84 38 36 Arvid Liepe, Head of Corporate Communications and Investor Relations, Cell Network AB, phone +46 8 5220 4185, mobile +46 70 956 51 85 ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/2000/04/26/20000426BIT00670/bit0001.doc http://www.bit.se/bitonline/2000/04/26/20000426BIT00670/bit0002.pdf