Magic Software Enterprises to Provide Innovative Business Solutions to Scotland's Inverclyde Council That Integrate With The AS/400.

Business Editors and High-Tech Writers

IRVINE, Calif.--(BUSINESS WIRE)--June 6, 2001

First Phase of Contract Valued At More Than $500,000

Magic Software Enterprises (Nasdaq:MGIC), a leading provider of state-of-the-art application development technology and business solutions, announced today that it has signed a contract with Scotland's Inverclyde Council to develop a number of strategic systems based upon a range of legacy platforms, including the AS/400.

The Inverclyde Council is a local government authority that works in partnership with communities, investors and volunteer organizations to provide effective, efficient and flexible services to the more than 85,000 people domiciled within a 60-square mile radius of the southern edge of the River Clyde. The first phase of the contract is valued at more than $500,000.

The initial systems being developed under the contract include a Council-wide Financial Management Information System and a Property Management Information System. Both solutions will integrate with Inverclyde Council's legacy systems in conformance with a new Scottish e-business agenda, which requires that all new information-based solutions integrate with existing IT systems.

Many of Inverclyde Council's systems operate on the AS/400 platform with Windows NT/98 clients, and utilize a range of databases, including DB2/400 and Oracle. It was primarily Magic's ability to work easily and efficiently in this type of heterogeneous environment that led Inverclyde Council to select Magic for its new solutions.

"Following a successful pilot project, it was clear that Magic understood our business needs, including our desire to transform our systems as quickly as possible and to deliver solutions that maximized our existing IT investments," said Maria Russell, director of information services for Inverclyde Council. "Not only did Magic demonstrate its ability to add value in a fraction of the time required with other conventional solutions, the company also embraced the project in a true spirit of partnership, drawing on the wealth of experience and knowledge of Council staff."

The Financial Management Information System being developed will provide new functionality covering many aspects of financial control and management, including commitment accounting and electronic ordering with Inverclyde Council suppliers. The Property Management Information System will help Inverclyde Council improve upon the cost-effective management of its property portfolio, and will serve as an integrated base for the development of further e-government applications.

"These new solutions will empower Inverclyde Council to manage its assets more effectively - improving efficiency levels without the massive overhead ordinarily associated with replacing existing systems or investing in additional staff to handle new systems development," said Menachem Hasfari, chief executive officer of Magic. "By partnering with Magic, Inverclyde Council staff can focus on the development of business-driven applications, leaving Magic to provide the necessary expertise for systems development. It is a win-win situation for them."

About Magic Software Enterprises

Magic Software Enterprises, a member of the Formula Group (Nasdaq: FORTY), develops, markets and supports software development and deployment technology that enables enterprises to accelerate the process of building and deploying applications that can be rapidly customized and integrated with existing systems. Magic technology, applications and professional services are available through a global network of subsidiaries, distributors and Magic solutions partners in approximately 50 countries. The company's North American subsidiary is located at 1642 Kaiser Avenue, Irvine, Calif., 92614, telephone [phone], fax [phone], http://www.magicsoftware.com.

The Formula Group is an international information technology company principally engaged, through its subsidiaries and affiliates, in providing software consulting services, developing proprietary software products and producing computer-based solutions.

Except for the historical information contained herein, the matters discussed in this news release include forward-looking statements that may involve a number of risks and uncertainties. Actual results may vary significantly based upon a number of factors including, but not limited to, risks in product and technology development, market acceptance of new products and continuing product conditions, both here and abroad, release and sales of new products by strategic resellers and customers, and other risk factors detailed in the company's most recent annual report and other filings with the Securities and Exchange Commission.