Cyber Com Consulting Group-High Billing Rate and Growing Demand; Interim Report for the period 1 January-30 June 2000.

Business Editors

STOCKHOLM, Sweden--(BUSINESS WIRE)--Aug. 28, 2000

The Period in Brief

-- Sales rose by 96 % compared to the corresponding period last

year, up from SEK 89.8 m to SEK 176.2 m

-- Operating earnings were SEK 14.8 (6.2) m and the operating

margin stood at 8.4 % (6.9 %). Operating earnings were charged

with goodwill amortization totaling SEK 3.4 (0) m

-- Headcount increased by 73 % on the corresponding period in the

previous year, from 187 to 323

-- Earnings per share amounted to SEK 1.40 (0.72)

-- Intensified focus on core e-Business and Telecom areas,

acquisition of Intra-X and divestments of ERP systems- and

training companies.

Sales and Earnings

Cyber Com's sales for January to June were SEK 176.2 m, an increase of 96 % compared to the corresponding period of the previous year (SEK 89.8 m). In the same period, operating earnings rose to SEK 14.8 m, corresponding to an operating margin of 8.4 %. The corresponding earnings and margin figures were SEK 6.2 m and 6.9 % in the first half-year 1999.

Operating earnings were charged with goodwill amortization totaling SEK 3.4 (0) m. Operating earnings before goodwill amortization were SEK 18.2 m, corresponding to an operating margin of 10.3 %.

Earnings net of financial items were SEK 15.8 (5.9) m, equating to an operating margin of 9.0 % (6.6 %). The figure includes capital gains of SEK 3.0 m derived from the disposal of Cyber Com's training operations and ERP systems enterprise.

Operations

Cyber Com provides integrated total expertise for efficient and value- added solutions for clients' entire business processes.

New Orders, Master and Collaboration Agreements

Cyber Com has signed master agreements relating to Internet and IT consulting services with:

-- Telia Mobile

-- Sweden's defense procurement agency (FMV)

-- SAS,

-- National Swedish Insurance Board (RFV)

-- Pension Premium Authority

-- Swedish Rail (SJ)

-- National Swedish Police Board

As a result of the master agreement and several successful development projects, Telia Mobile has appointed Cyber Com to develop a www system for billing and payment. The new system will allow Telia Mobile's customers to receive and pay for Telia Mobiles services directly via the Internet. This implies significant efficiency gains for Telia Mobile and its customers alike.

Cyber Com has been appointed to create an external Website for Sweden's first private casualty hospital, S:t Gorans Sjukhus AB. The assignment represents the first step in S:t Gorans' initiative aimed at creating a new Web-based information and communication channel. The assignment is being conducted in the form of a collaboration between different business areas within Cyber Com, exploiting the leading-edge expertise of the entire Cyber Com group.

IBM and Cyber Com have reached a partnership agreement implying that Cyber Com will be able to offer solutions based on IBM's solution sin the burgeoning e-commerce arena. The agreement allows Cyber Com to provide customers with faster, tried-and-tested methods for constructing new e- commerce sites.

Cyber Com has also signed a collaboration agreement with Software AG of Germany- one of the world's leading providers of software and integration technology. The agreement makes it possible to construct and provide cost efficient, secure and functionally superior solutions with the primary focus on e-Business, particularly XML and WAP.

Changes to Cyber Com's Corporate Management

Cyber Com's expansion has entered a new phase as a result of a change in the management team during the period. Mats Alders, previously CFO and Deputy CEO, has been appointed Cyber Com's new President and CEO. Per Bergstrom, President and CEO since incorporation in 1995 and one of Cyber Com's founders, has been appointed Deputy Chairman with a focus on growth issues and foreign start-ups. Gert Schyborger, Deputy CEO of SAAB AB, was also appointed new Chairman. Peter Tornquist, who has acted as Cyber Com's Chairman since 1998, remains a member of the Board. The management changes have been implemented in order to optimize the utilization of Cyber Com's management capital ahead of future initiatives.

Focus on e-Business and Telecom and Services business areas

In order to further clarify the company's market offering, Cyber Com is now focusing its operations on two core areas: Telecom and e-Business. This concentration has had implications including the absorption of the IT Solutions business area into the e-Business area.

Cyber Com already enjoys a solid position within mobile services and will focus on developing a strong niche position on the telecom market, where corporate business is interlinking broadband and mobility. Cyber Com's expertise in mobile operations and payment systems implies that the company is at the leading edge of progress in various wireless services and associated payment solutions. Cyber Com offers sophisticated consulting services and bundled services to telecom operators' business support systems, consulting services within product development and new mobile services development.

The business area will also develop a niche position within customer support systems and new Internet solutions targeted at the insurance market. Cyber Com's current clients include Telia Mobile, Netcom, several Ericsson companies and AMF.

In the first half-year 2000, the Telecom and Services business area generated sales of SEK 92.4 m and operating earnings of SEK 17.3 m. Operating earnings were charged with goodwill amortization totaling SEK 2.6 m. The business area employed 111 people at the end of the period.

Cyber Com enjoys a strong position in its core e-Business area which sells bundled offerings and advanced consulting services to the trading, medium- sized manufacturing and banking/finance sectors. The emphasis is on B2B, where Cyber Com develops customer business processes with the focus on customer support systems, trading sites, portals and broker solutions. Cyber Com's clients include Ericsson, DFDS Torline, Nordiska

Fondkommission and Compaq.

The e-Business area generated sales of SEK 82.4 m and operating earnings of SEK 7.9 m in the first half-year 2000. The business area employed 152 people at the end of the period.

Alongside its two core businesses, Cyber Com also harbors the Market Communication business area, which currently comprises the company Cyber Com Pir. In the first half-year, the focus of operations shifted away from Website production and towards Business Support and Interactive Branding where Cyber Com now offers the entire business chain from concept development and consultation to production of interactive media. This change entailed increased expenses during the first half-year; the new focus has yet to feed through to the Income Statement. Accordingly, progress remains unsatisfactory; Cyber Com's management is closely monitoring progress over the coming period in order to take the necessary measures if the altered operational focus does not yield the desired results.

In the first half-year 2000, the business area generated sales of SEK 7.4 m with negative operating earnings of SEK -7.5 m. The business area employed 32 people at the end of the period.

Acquisition of Intra-X

Consulting practice Intra-X- with 26 experienced consultants, the majority project managers- was acquired at the beginning of the year. The purchase price comprised a fixed element, plus an additional purchase price. The fixed purchase price amounted to SEK 55 m, the additional part is subject to a maximum of SEK 82 m. Group goodwill of around SEK 52 m arising from the acquisition will be amortized over a 10-year period.

Divestments of operations

As a step in the process of concentrating its operations, Cyber Com divested its ERP systems enterprise, Cyber Com Consulting Enterprise Solutions AB, and training venture Cyber Com Education Group AB during the first quarter. Cyber Com Enterprise Solutions AB is primarily active within systems development services in the SAP area. The divestments generated capital gains totaling SEK 3.0 m.

Annual General Meeting

The Annual General Meeting on 28 April resolved to amend the Articles of Association to remove the possibility of issuing different share classes. The company's current share, class B ordinary shares, will become the only share class. As a consequence, the pre-emption clause relating to class A shares was also removed.

In the period until the next Annual General Meeting is held, the AGM resolved to authorize the Board to issue shares, convertible debentures and/or promissory notes with detachable warrants on one or several occasions, conferring the right to subscribe for new shares, so that the company's share capital may increase by a total maximum of SEK 1,500,000.

The AGM also resolved that waiving the preferential rights of existing shareholders, the company is to raise a subordinated debenture with a nominal amount of SEK 10,000 by issuing debentures with a maximum of 250,000 detachable warrants conferring the holder with the right to subscribe for new shares in the company. The warrants, which were to be offered to employees in the Cyber Com, were subsequently withdrawn at the Extraordinary General Meeting on 24 July as a result of the prevailing market climate.

Human Resources 

On 30 June, Cyber Com's headcount was 323. This corresponds to a net increase in the first six months of the year of 53 people, or 20 %. On the same date, a further 14 individuals had also agreed to take up employment with Cyber Com. The average number of permanent employees amounted to 304, an increase of 89 % compared to the corresponding period in the previous year.

Investments

Investments in computers and equipment amounted to SEK 4.0 (3.9) m. Investments in company acquisitions totaled SEK 55.0 m for the period.

Liquidity

On 30 June, group liquid funds including short-term investments were SEK 73.3 (4.0) m.

Financial Position

On 30 June 2000, shareholders' equity was SEK 178.3 (17.6) m, corresponding to an equity ratio of 74.6 % (32.9 %) and shareholders' equity per share of SEK 19.24 with full dilution.

Parent Company

Apart from modest consulting operations, the parent company's operations relate to handling group-wide functions such as accounts, administration, information, marketing etc. The parent company employed 28 people at the end of the period.

Sales for the period January-June 2000 amounted to SEK 18.0 (9.2) m. Earnings net of financial items were SEK -0.4 (-7.4) m. Earnings for the period include capital gains from sales of subsidiaries amounting to SEK 3.6 m.

Parent company liquid funds were SEK 58.2 m on 30 June 2000. In the previous year, liquid funds including unutilized credit facilities were SEK 0.1 m.

Investments in computers and other equipment totaled SEK 0.4 (0.6) m.

Events after the End of the Period

Extraordinary General Meeting

As a result of the prevailing market conditions, the Extraordinary General Meeting on 24 July resolved to replace the warrants program resolved at the Annual General Meeting on 28 April with a new program. The new warrants program implies that the company will raise a new subordinated debenture with a maximum nominal amount of SEK 10,000, by issuing a debenture with a maximum of 400,000 detachable warrants conferring the holder with the right to subscribe for new shares in the company. Wholly owned subsidiary Cyber Com Consulting i Uppsala AB will hold preferential rights to subscribe for the subordinated debenture, for onward sale of the detachable warrants to employees of the Cyber Com group.

Outlook

Cyber Com will continue to pursue its strategy of only recruiting the most highly qualified professionals in order to ensure high quality in the core e-Business and Telecom business areas and other parts of the group.

The general decline in demand that has affected the sector has not influenced Cyber Com's order bookings. In fact, the market made extremely positive progress during the period, when demand for highly-qualified and experienced consultants accentuated.

Cyber Com's objective is to continue its forceful organic growth, outgrowing the market as a whole, while retaining the focus on profitability. Organic growth is to be complemented by strategic acquisitions, within or outside Sweden.

Cyber Com has a financial target of a minimum operating margin of 10%.

This report has not been examined by the company's auditor.

This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2000/08/28/20000828BIT00580/bit0001.doc http://www.bit.se/bitonline/2000/08/28/20000828BIT00580/bit0002.PDF The full report