The net sales of the Synergon Group amounted to almost exactly HUF 10 billion during the first half of 2006, with this the Company's performance exceeded that of the equivalent period of the previous year by 18 percent. At the beginning of the period, the hardware orders of the telecom and the public administration sectors played a substantial part in the sales achieved; however, due to various high-contribution projects of the second quarter, the contribution ratio for the entire six-month period was virtually the same as that of the base period. In contrast with the first half of 2005, when, eliminating the non-recurring effect of the releasing of previously made provisions of HUF 372 million, it made a loss of HUF 59.1 million, the Group closed the period with a positive net profit of HUF 23.7 million.

The parent company played a major role in the increase of the Group's sales. The 28-percent increase of the sales of Synergon and SAO was the collective result of various factors. Whereas the demand increase due to the expansion of the broadband networks of the telecom sector is expected to positively affect the entire year, the Company received substantial municipal government orders drawing on EU funds (GVOP 4.4.2 and 3.3.2) during the period. In addition, there was considerable growth in the orders of industry customers. On Group level, the effect of last year's reinforcement of sales activities is clearly perceptible, as the volume of new orders has required the expansion of resources in various areas.

Of the operating companies, Fibex, performing substantially better than in quarter 1, achieved a sales level 8 percent higher compared to the base during the first six-month period, despite the fact that there were considerable shortfalls during the first quarter due to the delays of cabling works. While operating expenses jumped during the period due partly to the increasing headcount, the net profit of the Company did not fall far behind that of the base period.

As a result of the discontinuance of uneconomical activities and the loss of some of its established markets, the sales of Infinity were 15 percent lower than the equivalent figure in the base period. Through the efficiency-improving measures instituted by the Czech company, losses were reduced by 62 percent on the operating level and by 70 percent net within a year. The company is expected to close the current year around the break-even point.

Like the in first quarter, Spam also closed the second quarter with a loss; the company is facing increasingly tough competition on one of its major markets, i.e. Microsoft solutions applications. Strong competition results in a contribution level substantially lower than before; consequently, the Croatian company closed the six-month period at a loss in excess of HUF 100 million despite the fact that its net sales increased by 25 percent.

Instead of the former, case-by-case measures that had not affected the fundamental problems, Synergon's management now plans in-depth structural changes in the interest of ensuring the stable profitable operation of the foreign operating companies. Synergon CEO Zoltán Radnóty stated: 'The introduction in October of matrix management will be a significant step forwards in the operation of the Group. Using the new operation model we will endeavour to make better use of our client relations in the region, our knowledge base and still significant efficiency reserves. At the same time group-level business branch control will become stronger ensuring that the operating companies are set on the growth course that the parent company is now clearly moving along.'

Financial results of Synergon Information Systems Plc. for the six-month period January 1 st to June 30 th 2006 (.pdf - 343 KB)
Unaudited, consolidated data collated in accordance with the International Financial Reporting Standards