Interim Report, Mind AB (publ), six months ended June 30, 2000

Interim Report, Mind AB (publ), six months ended June 30, 2000 Strong growth, increased focus on profitability 1 2 * Sales increased by 370 percent, to SEK 177.9 M (37.82 ), during the period. Sales in the second quarter amounted to SEK 99.0 M (20.6), an increase of 381 percent. * The operating loss, before amortization of goodwill, amounted to SEK 46.9 M (0.2). The operating loss before amortization of goodwill in the second quarter was SEK 30.2 M (0.2). * Increased focus on profitability: Mind's objective is to achieve positive results before amortization of goodwill in the first half of 2001. * The number of employees increased by 315 -- including 117 in the second quarter -- from 178 to 493, during the first half of the year. * Mind acquired two Internet operations during the second quarter, New Electronic Factory S.A.R.L, France and Kash Net Solutions AB, Sweden. * During the period a development center for wireless Internet systems was opened in Karlstad. * Mind's shares were listed on the "O" List of the OM Stockholm Exchange on June 13, 2000. Sales, earnings and goals Mind's sales during the period amounted to SEK 177.9 M (37.8). an increase of 370 percent compared with first-half 1999 sales. Sales in the second quarter amounted to SEK 99.0 M (20.6), an increase of 381 percent. The increase is sales was attributable both to new business and to expanded activities for existing customers. The operating loss for the period, before amortization of goodwill, amounted to SEK 46.9 M (0.2). The operating loss before amortization of goodwill in the second quarter amounted to SEK 30.2 M (0.2). The loss before tax in the first half of the year was SEK 56.7 M (0.2). The consolidated loss after tax amounted to SEK 58.9 M (0.2). Mind seeks to achieve a profitable position in the market as a fourth- generation Internet consulting firm. In line with this effort, Mind is assigning priority to growth rather than overall profitability over the short term, but with demands for profitability in the underlying assignments for clients. Mind's objective is to have growth in excess of 100 percent in the years immediately ahead. In addition, Mind's objective is to show a profit, before amortization of goodwill, in the first half of 2001. During the period January-June 2000, Mind chose to invest in strong growth that resulted in higher costs for new employees in the form of recruiting costs, training, equipment and other items. These costs are estimated to amount to slightly more than SEK 35 M. Geographical expansion and the integration of acquired companies during the period is estimated to have had a negative impact on earnings of slightly more than SEK 10 M. The Company also invested in the build-up of structural capital in the form of concepts and program-like work methods in special areas. These investments are estimated to have amounted to approximately SEK 3 M for the period. Customer contract activities in Mind continued to be profitable during the period. The current climate for e-commerce companies in the capital market had a negative impact on Mind's sales and results, since some customers discontinued their projects with Mind or were judged to be unable to fulfill their commitments to Mind. Negotiations are under way with these customers and Mind has established reserves attributable to these projects, which affected growth in sales negatively by 32 percentage points (SEK 11.7 M), and represented a charge of SEK 13.9 M against earnings. A specific fixed-price commitment that was made in 1999 affected earnings for the period negatively in the amount of SEK 1.9 M. Mind today has not substantial fixed-price commitments. Employees The number of Mind's employees increased by 315, of which 146 through acquisitions, from 178 to 493, or 177 percent, during the first six months Stockholm. August 14, 2000 The Board of Directors Auditors' statement We have reviewed the interim report for the six months ended June 30, 2000 in accordance with the Recommendation issued by the Swedish Institute of Authorized Public Accounts (FAR). A review is considerably limited in scope compared with an audit. Nothing has come to our attention that causes us to believe that the interim report does not comply with the requirements of the Annual Accounts Act. Stockholm, August 14, 2000 Ernst & Young AB Hamish Mahon Authorized Public Accountant For additional information, please call: Jörgen Larsson, CEO. Tel.: 0733-61 10 10 Maria Andark, Investor Relations. Tel.: 0733-61 10 10 ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2000/08/14/20000814BIT00220/bit0001.doc The full report http://www.bit.se/bitonline/2000/08/14/20000814BIT00220/bit0002.pdf The full report