Apart from the effects of unfavourable market trends, the results of the Synergon Group during the first nine months of 2005 also reflect the positive changes of the Company's sales structure. The decline in the volume of sales is an indication of the fact that the government administration sector has postponed a substantial part of its planned IT purchases, creating a difficult situation for all the operators concerned on the Hungarian information technology market. At the same time, the composition of sales was considerably better than during the previous year: service content approached 50 percent, which is also reflected in a slight increase of the contribution margin. The Company closed the first nine months with a moderate net profit of HUF 138 million.

The sales of the Synergon Group during the first nine months of 2005 amounted to app. HUF 12.4 billion,
8 percent lower than in the previous year. The decline was mainly due to the lack of orders from the government administration sector: on the threshold of an election year, there has traditionally been a drop in terms of the volume of not-so-impressive IT investments; that effect has currently been reinforced by the government's financial policy attempting to sustain a balance in the budget, which seeks to cut back on institutional funding that does not directly affect the people. Meanwhile, there has been no significant positive effect of the EU grant opportunities.

As a positive development, however, the shortfall compared to the previous year diminished substantially during the third quarter: at the end of June, the level of sales was still 13 percent lower compared to the base period. The lack of government purchases was partly counterbalanced by outstanding performance primarily in the industry, services and financial sectors. The composition of contracts has also improved: service content now amounts to nearly half the overall contracted value. As a result of the above factors and the ongoing efficiency-improving measures, the contribution margin increased to
22 percent.

Of the operating companies, Span and Fibex performed remarkably, achieving a growth in net sales of 43 and 39 percent respectively compared to the previous year. At Infinity, the impact of the substantial ongoing reorganisation efforts has gradually been felt; for the first time after a long gap, the company achieved a profit during the third quarter. Despite that fact and the expected high level of sales during the remaining three months of the year, Infinity may still have made a loss on a 12-month basis.

Synergon/SAO still secures the two-thirds of the Group's sales revenue. High-contribution system support and operation activities of SAO exceeded its plans and base year data as well. The Business Solutions Division is expected to deliver to plan both during the first nine months and on a full-year basis. Following a powerful first six months, Network Communications continued to perform well and, while not managing to quite live up to the plans due to the lack of implementation of investments in the administration sector, it still generated a substantial part of the Company's sales and contribution. Following the regional system integrator agreement with Huawei Co. Ltd., the Division started the exploration of business opportunities in other countries of the region, while on the Hungarian market, it has had achievements among manufacturers as well as in the telecom sector.

The Group's technical and organisational integration continued during the third quarter. As a result of the Regional Integration Program implemented during the year, uniform conditions have been created for regional operation and a structure has been established that will be able to integrate additional operating companies in the future with high efficiency. While regional coordination is operated by the Regional Executive Office consisting of managers responsible for the various divisions, the management of the Synergon Group and of Synergon plc may also become separate in the near future.

Financial results of Synergon Information Systems plc. for the nine-month period January 1st - September 30th 2005 (.pdf - 228 Kb)
Unaudited, consolidated data collated in accordance with the International Financial Reporting Standards