Interim financial reporting for the fourth quarter of 2008

Highlights of the fourth quarter
• Operating revenue grows by 4 % to NOK 125.5 million
• EBIT (earnings before interest and tax) of NOK 0.4 million
• Licence revenue grows by 69 % to NOK 23 million
• Cash and cash equivalents of NOK 83 million
• 471 employees, down from 502 in Q3/08 and 541 in Q4/07
• Launch of the new ProArc suite integrated with Microsoft® Office System
• Bouvet and Fujitsu signed as new partners
• Offshoring facility established in Bangalore/India

Group financials
Software Innovation had operating revenue of NOK 125.5 million in the fourth quarter of 2008, compared to NOK 120.3 million for the same period of the previous year. Earnings before interest, tax, depreciation and amortization (EBITDA) ended at NOK 3.5 million for the quarter, compared to NOK -10.6 million for the same period of the previous year.
At the end of the fourth quarter, the Group's total assets amounted to NOK 369.7 million. Equity came to NOK 114.4 million, an equity ratio of 31 %. Current assets amounted to NOK 212.3 million, and current liabilities were NOK 240.7 million. Of the non-current assets totalling NOK 157.3 million, deferred tax assets recognized in the balance sheet comprised NOK 39.1 million, goodwill NOK 85.7 million, and other intangible assets NOK 32.5 million. The deferred tax assets recognized in the balance sheet were written down by NOK 9.5 million in the quarter.
There is an ongoing focus on the cash position of the Group. Cash flow from operating activities during the fourth quarter ended at NOK 24.6 million, an improvement of NOK 21.7 million from the same period last year. The cash position is satisfactory; cash and cash equivalents at the fourth quarter amounted to NOK 83 million.

A closer look at operations

Revenues
Licence revenue during the fourth quarter amounted to NOK 23 million, up 69 % from the same period of the previous year. There has been a stable and positive trend in the growth of licence revenue, driven by good development in sales of the company's own licences, both for ProArc and for 360°.
Service and maintenance revenue continues to show stable growth. During the fourth quarter this revenue amounted to NOK 30 million, up 9.1 % from the same period last year.
Income from consulting services during the fourth quarter totalled NOK 72.5 million, down 8.4 % from the same period last year. Reduction in consulting revenue is driven by fewer consultants. The trend in hourly rates and utilization rates were satisfactory during the quarter.

Expenses
The cost of goods sold during the fourth quarter totalled NOK 8.9 million, down 55.9 % from the same period last year. The reduction in cost of sales is due to lower sales of 3.party products/services.
Personnel expenses during the fourth quarter totalled NOK 93.5 million, unchanged from the same period last year. The underlying trend in personnel costs is driven by fewer employees in the Group (471 employees in Q4/08 compared with 541 in Q4/07), combined with necessary and competitive growth in salaries. A significant part of the organisational adjustments was done through the fourth quarter and is therefore not fully reflected in the cost.
Other operating expenses during the fourth quarter totalled NOK 19.6 million, up 15.7 % from the same period last year. The increase in other operating expenses is mainly due to two factors: (1) costs related to reorganizing and refining the Norwegian operation, and (2) costs related to handling the offer from Borea Opportunity IV.

Results
Earnings before interest, tax, depreciation and amortization (EBITDA) during the fourth quarter ended at NOK 3.5 million, which is up NOK 16.1 million from the previous quarter and up NOK 14.1 million from the same period last year. Earnings before interest and tax (EBIT) during the fourth quarter came in at NOK 0.4 million, which is up NOK 16.1 million from the previous quarter and up NOK 15.2 million from the same period last year.

Contact:
CEO Frode Haugli phone: +47 23 89 90 00 mob. +47 95 10 10 00
CFO Glenn Veiby phone: +47 23 89 90 00 mob. +47 41 43 18 44

This information is subject of the disclosure requirements acc. to §5-12 vphl (Norwegian Securities Trading Act)