Infovide-Matrix - 2008 financial forecast`s correction

Warsaw, September 22, 2008

Infovide-Matrix, a leading provider of consulting services and innovative IT solutions, has decided to lower the financial forecast for the end of this year. The reasons for the correction are the greater employment and development costs incurred due to the dynamic growth of the sales of consulting and implementation services. The increase of potential in the company’s key area is the consequence of Infovide-Matrix’s strategy carried out on the bases of Consulting & Solution Implementation model.

Details regarding Infovide-Matrix’s forecasts for the year 2008, in million PLN:

* estimate for H1 2008 results corrected by the value of managerial options program

The value of the revenues’ backlog, as stated on 1 August 2008, amounts to PLN 143.6m (33% growth compared to the same period last year).

“We are systematically strengthening business competences, foundations and growth potential in the markets of IT and business consulting as well as integration and implementation services. Infovide-Matrix’s participation in the IT consulting market reached almost 20% in 2007, which has put us on a leading position (data according to IDC). We have a comprehensive products’ offer which is very well adapted to the market needs and current tendencies in management of companies. We are determined to achieve our long-term goals and to build the firm’s value for our shareholders” – adds Borys Stokalski, Vice-President of the Board, Infovide-Matrix SA.

The reasons for the forecast’s correction and actions taken by Infovide-Matrix:

• In H1 2008 the company financed a rapid growth. The revenue from sales of services increased by 34.6% in relation to H1 2007. The realization of this growth called for a bigger team. The employment increased by 100 consultants. The costs related to such a fast employment growth had not been calculated in the forecast. Simultaneously, the employment growth directly translates into the dynamics of revenues from own services, which will enable to increase profitability in the future.
• Market development in the area of key investments and ensuing costs was slower than the firm had assumed when making a financial plan for 2008. The company has especially invested in the presence in the Ukrainian market, preparation of a comprehensive offer for the power sector, strengthening the offer for the insurance sector and preparation of an offer on delivery chain management.

“The correction of the forecasts does not change the fact that we are still planning to end the year with a big plus. We have decided, however, to curb the costs related to the acquisition of contracts in foreign markets and focus on the most profitable areas in the understanding of the offer and the trade. We are also optimizing the efficiency within the Capital Group. The large scale that we have reached – near 800 people in the Group – makes us work on perfecting the management and internal processes” – explains Jacek Królik, Vice-President of the Board, Infovide-Matrix SA.

Growth perspectives of Infovide-Matrix’s Group

• Consistent realization of the CSI strategy through an organic growth and the development of the Capital Group
  
  Acquisition of CT Partners
  Acquiring 53.26% of CTP’s shares has enabled Infovide-Matrix to broaden its offer with consulting and training services in the field of IT Service Management. This area excellently complements Infovide-Matrix’s service portfolio, which currently holds a key position in ITSM nationwide. CTP earned approx. 6.8m sales revenue in 2007.
  
  Acquisition of DahliaMatic Sp. z o.o.
  Acquiring 60% of DahliaMatic’s shares significantly increases Infovide-Matrix’s potential in the field of enterprises’ and public institutions’ modernization services. The company specializes in the implementation of Oracle applications orientated on commercial enterprises’ management support and state administration sector’s management support (it possesses the status of Oracle Certified Partner). In 2007 DahliaMatic earned revenue of PLN 11.4m and net profit of PLN 2m. In the following year the firm is planning PLN 14m revenue and PLN 4m net profit. Thanks to the acquisition of DahliaMatic the group of Infovide-Matrix joins the top party of companies which offer business consulting with the use of Oracle applications.
• Execution of re-branding
  The process of re-branding constitutes an inseparable element of the strategy. Not only does it comprise communication areas but also relates to such fields of company’s operations as the offer’s development, advance of competences and innovation. The new brand will support the creation and development of the Group’s identity and competences in compliance with the characteristics of a CSI company.
• High position in the market
  Infovide-Matrix’s high market position and inclusion in a small group of market leaders as well as consistent realization of Consulting & Solution Implementation’s strategy are confirmed by independent market reports.
  
  According to the IDC Poland’s report, IT Services 2008-20012 Forecast and 2007 Vendor Shares, Infovide-Matrix holds the first position in the category of Information System Consulting, with the market share of 19.9%, being ahead of such firms as Accenture, HP, IBM and Deloitte. Infovide-Matrix also ranks first in the category of Custom Application Development, gaining a 14% market share. According to the report TOP200, The Polish IT Market, published by Computerworld in May 2008 the company comes in first amongst those firms which offer consulting services in the Polish IT market and second amongst custom-made software providers. Infovide-Matrix SA also holds the first position in the ranking of companies earning revenues from services rendered in the telecommunications sector. Entering the market by new operators, including virtual ones, plays a significant role in this sector. Infovide-Matrix, being a leader amongst service providers for this line, distinguishes itself with the most comprehensive offer which comprises all relevant aspects of modern telecommunications. This offer has been strengthened recently thanks to the development of billing competences.
• Investment in R&D
  Infovide-Matrix has established its own R&D center – The Infovide-Matrix’s Center of Innovation. Its aim will be to conduct research and development work within the confines of managerial, product and strategic innovations in relation to the business use of information technologies.
• Good growth perspectives in the macro-economic scale
  The research of independent market analysis experts confirms that the expenditure for IT services –  Infovide-Matrix’s key area of operations – has been growing consistently in recent years. According to IDC report, in 2007 total value of the Polish IT services market amounted to USD 2.3mm marking the growth of 23.5% in comparison to 2006. Forecasted value of IT services market amounts to USD 2.5mm in 2008, and in 2009 will get close to USD 3mm.

Projects carried out by Infovide-Matrix in H1 2008.

In the first half of 2008, within the confines of the firm’s basic operations, Infovide-Matrix was engaged in the realization of projects in its crucial sectors:

• In the telecommunications sector, the firm continued work at the leading operators’, among others, PTC Era, Telekomunikacja Polska SA and Polkomtel SA. Other projects have also been launched regarding the implementation of the billing and CRM systems in one of the sector’s companies. Work connected to the implementation of other functionalities of data warehousing was also conducted. Infovide-Matrix has fulfilled contracts on building the system and hardwired BI platform for one of the Bulgarian mobile phones operators. Similar work has been done for one of the Byelorussian mobile phones operators.
• In the industry sector, work on consulting projects and on implementation of ERP systems proceeded. The realization of the data warehouse change implementation project in PSE-Operator was successfully completed (in SAP BW technology). New work has also begun: a project SAP BW for RWE Stoen, a project related to the customization of Oracle eBS system for Centrostal Gdański (the Złomrex Group) and 
  the implementation of ERP Impulse system in Netbud.
  Also, the support project of Skoda Auto Polska has been activated in the Work Flow system implementation process. The implementation of SAP has started in a company belonging to one of the biggest capital groups in the food industry.
• In the power sector, an analysis for the implementation of Customer Care & Billing  system is undergoing at the Polish division of an European energy company.
• In the finance and banking sector, the company has continued projects for key clients and institutions. Factoring service systems have been deployed. The implementation of Commission Module for the bank’s Sales Network continued in Pekao SA. An agreement has been signed with the Alior Bank for the implementation of the operating risk management system. The system for the distribution of investment funds’ participation units, designed and implemented by Infovide-Matrix, has received a distinction in the Gazeta Bankowa’s contest, “Hit of the Year for Financial Institutions”. The solutions awarded in the contest are recommended to financial institutions as services supporting both the firms and their clients. Infovide-Matrix has gained a recommendation in the category of computer systems. In the same contest, in the category of electronic banking and e-finance, Raiffeisen Bank Polska has been given an award for the internet banking system Rbank, designed and implemented by Infovide-Matrix. The system, using elements of Web 2.0 for the first time in Poland together with a unique concept of Rich Internet Application, is meant for the bank’s active retail clients and micro-enterprises.
• In the public administration sector, the company has continued consulting services for MSWiA (the Ministry of Internal Affairs) and the Ministry of Finance. In the Ministry of National Defense, Infovide-Matrix has conducted a series of accredited training sessions on project management based on the methodology of PRINCE2 Foundation. Training and exams enabling to obtain PRINCE2 Foundation’s certificate are carried out by the Infovide-Matrix Academy.
• Within the SLT sector (shipping, logistics, transport) Infovide-Matrix has implemented the IBM Rational Portfolio Manager 7.1 system for the Polish Airlines LOT. This solution is to support the Polish airline carrier in the project portfolio management.
• In H1 2008 Infovide-Matrix SA has been granted the title of the Oracle Polska Partner of the Year 2008. This honorable mention is the result of actively supporting the sales of Oracle applications in the Polish market and the first implementation of the Oracle E-Business Suite solution, version12, in the country.
  The first in Poland implementation of version 12 of Oracle E-Business Suite for the ISD Polska holding comprises the implementation of the comprehensive management system and business processes support in the finance, logistics, strategic planning, budgeting and controlling departments.

Co-operation with Universities

Infovide-Matrix Group has established a cooperation with the L. Koźmiński Higher School of Enterprise and Management. The agreement signed with the School in Q2 2008 assumes a wide range of cooperation in the field of education for IT managers as well as business managers cooperating with IT departments. Starting in October 2008 the students will be able to participate in classes prepared by Infovide-Matrix SA’s experts. The Group’s consultants, within the confines of MBA studies,  teach such advanced subjects as Corporal Architecture and IT Governance. The classes will be conducted by consultants from Infovide-Matrix SA and CT Partners SA which belongs to the Infovide-Matrix Capital Group. The WSPIZ students will have access to training sessions on IT Governance comprising, among others, projects management based on various methodologies, such as Agile, PMBOK and PRINCE2(TM) or maintenance management based on ITIL(R) standard.

H1 2008 results

Infovide-Matrix’s results, especially those related to the sales of services, prove that the company is systematically realizing its strategic goals. Progressively, revenue from the sales of own services in 2008 amounted to PLN 79.8m which constitutes 34.6% growth in relation to the same period last year. In H1 2008 the participation of the revenue from provision of services in total revenue reached 82.9% (in H1 2007 – 61.6%).

Financial results in million PLN: