euro adhoc: S&T System Integration&Technology Distribution AG / S&T announces results for the 3rd quarter and first nine months of 2003 (E)

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  • Total sales rise by 2% in the 3rd quarter and by 13% in the first nine months
  • EBIT of minus EUR 1.4 million in the third quarter, minus EUR 2.2 million in the first 9 months
  • Sales in the high margin solutions business rise by 141% in the 3rd quarter and by 102% in the first nine months

28 October 2003, Vienna, Austria - S&T System Integration & Technology Distribution AG (Vienna Stock Exchange: SNT, OTC: STSQY), a leading IT systems integrator in Central, Eastern and Southeast Europe announces results for the 3rd quarter 2003 and first nine months ended 30 September 2003.

As already announced on 14 October 2003, total sales in the 3rd quarter 2003 amounted to EUR 44 million, a 2 percent increase over the same quarter in the previous year. In the first nine months of 2003, sales rose from EUR 115 million to EUR 130 million, a 13 percent increase compared to the previous year.

Third quarter sales in the high-value service segment Business Solutions stand at EUR 10 million. The increase of 141 percent compared to the 3rd quarter 2002 is the result of the continued focus on the higher margin solution and service business. On a nine-month basis, this represents an increase of 102 percent in this segment. Sales in the Enterprise Systems segment fell by 19 percent in the reporting quarter compared to the same quarter in 2002. The increase in the gross margin from 23 percent in the third quarter of the previous year to some 28 percent in the 3rd quarter 2003 should also be seen in connection with this pleasing shift in sales. In the first nine months of the current business year the gross margin rose from 26 percent in 2002 to 28 percent.

EBITDA (earnings before interest, taxes, depreciation and amortisation) amounts to EUR 0.2 million, a decline of 64% in the 3rd quarter 2003 and 12% in the first three quarters of 2003. EBIT (earnings before interest and taxes) is minus EUR 1.4 million in the 3rd quarter and minus EUR 2.2 million for the first 9 months of 2003 (including a EUR 1,1 million impairment adjustment of the Turkish operation in the 2nd quarter 2003).

The main reasons for this decline in earnings are weak sales in the summer months and the postponement of planned projects in Romania, Russia and Ukraine to the 4th quarter 2003. The planned shift toward higher value solutions and services led to a 37 percent increase in payroll costs in the first nine months of the current business year.

As in previous years, management expects strong sales in the 4th quarter 2003 (the 4th quarter 2002 accounted for 32 percent of the total sales for 2002, in 2001 the figure was 38 percent). The restructuring measures initiated during the year should impact costs favourably in the next two quarters. Marketing initiatives have been started to increase the company's presence in the comparatively large IT markets Austria, Poland, the Czech Republic and Russia. The recently announced acquisitions of software companies in Slovenia and Croatia will shift the product portfolio still further in the direction of solutions and services and thus higher margins. The year 2004 will see the accession to the EU of 10 candidate states. As a result, S&T will generate over 50% of its sales within the EU. The expected upturn in direct investments (FDI) should lead to higher than average market growth in 2004 and the following years. Due to the weak results in the 3rd quarter 2003, expectations for EBIT for 2003 as a whole will be downscaled to a "black zero." For total sales, management expects a result of around EUR 190 million.

CONSOLIDATED INCOME STATEMENT (unaudited) in EUR 1,000 for the three months period ending
on September 30, 2003 and 2002

Sales (in EUR 000) Q3 2003 Q3 2002 -%+ -------------------------------------------------------------------- Business Solutions (BS) 10,442 4,336 141% Enterprise Systems (ES) 24,871 30,884 -19% Customer Support (CS) 6,276 6,034 4% Managed Services (MS) 814 0 - Medical (MED) 1,149 1,491 -23% Information Technology Distribution (ITD) 0 7 - -------------------------------------------------------------------- Total sales 43,552 42,752 2% -------------------------------------------------------------------- Other Income 790 102 675% -------------------------------------------------------------------- Total Revenues 44,342 42,854 3% -------------------------------------------------------------------- COGS -31,418 -32,915 -5% Staff -8,302 -5,850 42% Other Operating Expenses -4,429 -3,554 25% -------------------------------------------------------------------- EBITDA 193 535 -64% -------------------------------------------------------------------- Depreciation and amortisation -952 -648 47% -------------------------------------------------------------------- EBITA -759 -113 572% -------------------------------------------------------------------- Amortisation of goodwill -673 -665 1% Profit from Operations / EBIT -1,432 -778 84% -------------------------------------------------------------------- --------------------------------------------------------------------

CONSOLIDATED INCOME STATEMENT (unaudited) in EUR 1,000 for the nine months period ending
on September 30, 2003 and 2002

Sales (in EUR 000) 2003 2002 -%+ -------------------------------------------------------------------- Business Solutions (BS) 23,459 11,600 102% Enterprise Systems (ES) 80,621 74,679 8% Customer Support (CS) 18,264 18,477 -1% Managed Services (MS) 2,063 0 - Medical (MED) 5,553 7,040 -21% Information Technology Distribution (ITD) 0 3,408 - -------------------------------------------------------------------- Total sales 129,960 115,204 13% -------------------------------------------------------------------- Other Income 2,095 1,027 104% -------------------------------------------------------------------- Total Revenues 132,055 116,231 14% -------------------------------------------------------------------- COGS -94,188 -85,026 11% Staff -22,238 -16,252 37% Other Operating Expenses -12,278 -11,130 10% -------------------------------------------------------------------- EBITDA 3,351 3,823 -12% -------------------------------------------------------------------- Depreciation and amortisation -2,413 -1,837 31% -------------------------------------------------------------------- EBITA 938 1,986 -53% -------------------------------------------------------------------- Amortisation of goodwill -3,097 -1,715 81% Profit from Operations / EBIT -2,159 271 - -------------------------------------------------------------------- --------------------------------------------------------------------

Total sales per region in EUR 1,000 for the nine months period ending on September 30, 2003 and 2002

2003 2002 +/- % --------------------------------------- Adriatic 42,621 45,001 -5% Central 35,860 30,188 19% Cyrillic 17,072 26,914 -37% South 34,407 13,101 163% --------------------------------------- 129,960 115,204 13%

Adriatic: Slovenia, Croatia, Bosnia-Herzegovina, Republic of Macedonia, Serbia and Montenegro
Central: Czech Republic, Hungary, Poland, Slovakia
Cyrillic: Russia, Ukraine, Baltics, Moldova, CIS
South: Romania, Bulgaria, Cyprus, Greece, Malta, Turkey

Conference Call
S&T’s management is available for a conference call on October 28 at 4.00 p.m. Central European time, UK: 3.00 p.m., US: 10.00 a.m. Eastern time. To take part in the conference call, please dial +49 69 50957 8439 a few minutes prior to the start time. For your convenience, an instant replay will be available from October 28 at 6.00 p.m. Central European time until November 02 at 6.00 p.m. Central European time. The replay telephone number is: +49 69 50 957 9999 and the conference reference number is 246856. If you have any questions please call +49 69 957 0000 for assistance.

This information reflects the situation of S&T as per September 30, 2003. The information contains certain forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, financial condition, performance or achievements of S&T, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following:
- competition from other companies,
- changes in operating expenses,
- attraction and retention of qualified employees,
- uncertainties arising out of S&T's operation outside Austria,
- adverse changes in applicable tax laws,
- adverse changes in governmental rules and fiscal policies,
- civil unrest,
- acts of God,
- acts of war, and
- other factors referenced in this information.
Given these uncertainties, prospective investors are cautioned not to place undue reliance on such forward-looking statements. No representation or warranty can be given, expressly or implied, regarding the correctness, completeness or fairness of information and opinion regarding such forward-looking statements contained in this information. S&T disclaims any obligation to update any such forward-looking statements to reflect future events or developments. S&T and the persons acting on behalf of S&T do not accept any liability whatsoever arising from any use of this information or its contents or otherwise arising in connection therewith. This information does not constitute an offer or invitation to subscribe for or purchase any securities of S&T.

About S&T
S&T is a leading provider of IT solutions for customers in 20 countries in Central, Eastern and Southern Europe. The company provides consulting services, software development, IT solutions implementation and support services around the clock to the most demanding customers in telecommunication, banking, energy production and distribution, government and health care.

Further inquiry note:
Karl Tantscher
Chief Executive Officer

Henriette Lininger
Investor and Public Relations

S&T System Integration & Technology Distribution AG
Gunoldstrasse 16, 1190 Vienna, Austria
Phone: +43 1 367 80 88 0
Fax: +43 1 367 80 88 99
Tel: 01-367 80 88
FAX: 01-367 80 88-99

end of announcement euro adhoc

Emittent: S&T System Integration&Technology Distribution AG Gunoldstrasse 16
AT-1190 Wien
Tel: 01-367 80 88
FAX: 01-367 80 88-99
ISIN: AT0000905351
Indizes: ATX Prime, NECI, ViDX
Börsen: official dealing Wiener Börse AG, Nasdaq Europe
Branche: Computing & Information Technology
Sprache: Englisch