Proact IT Group — Interim / Quarterly Report 2011

Jul 12, 2011

HALF-YEARLY REPORT January - June 2011

Continuing growth for Proact

The first six months in brief

• Revenues increased by 49 % to SEK 1,007 (677) million.
• EBITDA increased by 32 % to SEK 48.8 (37.1) million.
• Profit before tax fell by 48 % to SEK 13.4 (25.5) million. Excluding acquired units, profit increased by 13 % to SEK 28.8 million. Profit was affected by acquisition costs amounting to SEK 10.7 million.
• Profit after tax fell by 52 % to SEK 8.8 (18.5) million
• Profit per share fell by 67 % to SEK 0.64 (1.93).
• Return on equity over the last 12 months amounted to 23.7 (32.2) %.

The second quarter in brief

• Net turnover increased by 70 % to SEK 611 (359) million.
• EBITDA increased by 39 % to SEK 31.3 (22.5) million.
• Profit before tax fell by 37 % to SEK 10.0 (16.0) million. Excluding acquired units, profit increased by 8 % to SEK 17.3 million. Profit was affected by acquisition costs amounting to SEK 7.3 million.
• Profit after tax fell by 46 % to SEK 6.3 (11.6) million
• Profit per share fell by 59 % to SEK 0.48 (1.18).

About Proact

Proact is a specialist in storage, archiving and securing large volumes of mission-critical information. As an independent integrator, Proact provides systems, support and consulting services within its focus area of data storage and archiving.

The Proact Group has more than 600 employees and conducts business in Belgium, Czech Republic, Denmark, Estonia, Finland, Great Britain, Latvia, Lithuania, The Netherlands, Norway, Slovakia, Spain and Sweden. Proact was founded in 1994 and its parent company, Proact IT Group AB (publ) has been listed on Nasdaq OMX Stockholm since 1999 under the symbol PACT.

Additional information about Proact is available at www.proact.eu

Report by Olof Sand, Managing Director of Proact

Proact has identified a niche in the field of IT infrastructure handed, storage and archiving. Focusing on this niche, the company's ambition is to create a company operating on the most important markets in Europe. The acquisitions that have taken place over the past six months mean that Proact is now established on 13 markets and is the biggest storage and archiving specialist in Europe. Germany, France and Poland are important future markets.

Over the second quarter of the year, Proact acquired 75 % of storage integrator B2net in the United Kingdom. With some 165 employees over five locations and revenues for the year of around SEK 500 million, the company holds the same position in the United Kingdom as Proact holds on other markets. This acquisition will result in synergies in the fields of sales and purchasing, as well as the opportunity for further experience exchange between staff in the different countries.

Proact has grown by 70 % over the quarter compared with the same period last year. 64 % of this growth relates to acquired companies. Organic growth adjusted for currency effects amounted to 13 %. Revenues for the period of 12 consecutive months amounted to SEK 1,717 (1,310) million.

The contracted income is an important element in Proact's stability and accounts for around one-third of total income. This includes financing, support and cloud services, most of them with an agreed maturity of three years.

Profit before tax for the second quarter amounted to SEK 10.0 (16.0) million. This profit includes nonrecurring acquisition costs of SEK 7.3 million and planned depreciation of acquired intangible assets of SEK 4.4 million. The profit for the quarter, excluding acquired companies, amounted to SEK 17.3 million; 8 % up on last year. With the effect of non-recurring acquisition costs of SEK 10.7 million, profit before tax for the first six months of the year amounted to SEK 13.4 (25.5) million.

This quarter has been characterised by intensive integration of acquired units. The integration of Databasement, which operates in the Netherlands, Belgium and Spain, has gone according to plan. The cloud services offered by Proact Managed Cloud Services are being received well on all Proact markets. Major emphasis will be placed on further increasing this over the rest of the year. The integration of B2net in the United Kingdom, which was acquired in the early part of the second quarter, has got off to a good start; and the company is demonstrating growth of 25 % compared with the same quarter last year.

The integration of Storyflex, operating in the Czech Republic and Slovakia, has taken longer than planned. The process involved complicated acquisition of assets and liabilities, and it has taken some time for the authorities to register Proact's new subsidiary. All the formalities have now been completed and the company is fully operational.

Profitability growth in Denmark, which is part of Business Unit West, has not been satisfactory. Measures have been undertaken to enhance emphasis on high-efficiency fields. The measures undertaken are expected to take full – and positive – effect over the second half of 2011.

Proact's steering and follow-up model has now been implemented on all markets. The agreements with the most important system suppliers have been reworded to include Proact operations in all 13 countries.

The Group employed 623 people at the end of the quarter, 295 more than for the same period last year. Acquired units represent 250 of these people.

MARKET REVIEW

According to research company IDC, the storage market is now being driven mainly by the demand for new storage technologies and techniques to help clients to utilise their existing solutions more cost-effectively. This, combined with the continuing need to protect digitally stored information and to maintain uninterrupted operation, has helped to ensure ongoing strong growth in the market. An increasing number of clients are redesigning their backup solutions in order to implement new technologies, and are also reviewing their data centre design disaster protection solutions.

The development towards more use of cloud services is taking place gradually on the market. Secure transformation and migration are vital key words in this process. To meet these market requirements, Proact Managed Cloud Services has developed a unique portfolio of services and well defined processes to allow it to supply cloud services. These cloud services are being supplied in accordance with an agreed Service Level Agreement (SLA), where clients pay charges according to the amount of capacity they utilise. Cloud services can be supplied by any of Proact's data centres, but also by client data centres or a combination of these. This gives clients maximum flexibility, efficiency and security.

FINANCIAL OVERVIEW

Over the first six months of 2011, Proact's revenues amounted to SEK 1,007 (677) million, representing an increase of 49 %; or 56 % adjusted for currency effects. Organic growth amounted to 7 %, or 14 % adjusted for currency effects.

This growth in revenues is due mainly to clients in the fields of trade & services, the manufacturing industry and banking & finance. The acquisition in the United Kingdom has made a position contribution in the field of banking & finance.

Revenues per Business Unit	Jan-Jun 2011	Jan-Jun 2010
North	486	457
West	323	162
Benelux and Spain	149	43
East	53	30
Proact Finance	13	3
Groupwide/elim.	-17	-18
Sales	1,007	677

Over the second quarter of 2011, revenues amounted to SEK 611 (359) million, representing an increase of 70 %; or 77 % adjusted for currency effects. Organic growth amounted to 6 %, or 13 % adjusted for currency effects.

Revenues per Business Unit	Apr-Jun 2011	Apr-Jun 2010
North	258	234
West	253	88
Benelux and Spain	72	32
East	30	12
Proact Finance	8	2
Groupwide/elim.	-10	-9
Sales	611	359

Of the total turnover over the first six months of the year, system sales amounted to SEK 654 (444) million, representing an increase of 47 %.

Turnover for service operations amounted to SEK 351 (232) million, representing an increase of 51 % compared with the previous year.

Turnover per operating segment	Jan-Jun 2011	Jan-Jun 2010
System sales	654	444
Service operations	351	232
Other revenue	2	1
Sales	1,007	677

System sales over the second quarter amounted to SEK 395 (239) million, an increase of 65 %.

Turnover for service operations amounted to SEK 215 (119) million, representing an increase of 81 % compared with the previous year.

Turnover	Apr-Jun	Apr-Jun
per operating segment	2011	2010
System sales	395	239
Service operations	215	119
Other revenue	1	1
Sales	611	359

Proact Finance is continuing its strong development. Future contracted cash flows amount to SEK 82 (31) million.

Major deals in the second quarter:

A number of major deals have been agreed with organisations such as HMN and Alm.Brand in Denmark, Tieto and Nokian Rennkaat in Finland, Kanal2 TV in Estonia, Globus and Continental Automotive in the Czech Republic, Sparebank 1 Group and Unit4 Agresso in Norway, Local Government in the Netherlands, Marin Mätteknik, the Swedish National Laboratory of Forensic Science, Bisnode and Octapharma in Sweden, and Bergé in Spain.

Important events in the second quarter

• Major storage deal in finance sector This deal relates to the upgrading of an existing storage solution and a new archiving solution in order to meet new archiving requirements. Greater demands from the organisation have also led to it investing in a cluster solution in which all data is stored twice across two geographically separate data centres, which guarantees the safety of the information should there be a system crash or interruption.
• Cost savings and growth opportunities for Coventry City Council B2net has supplied a project for updating of the client's IT infrastructure and thereby permitted cost savings, options for future growth, flexibility and future double replication of data. The client was looking for a supplier that could take responsibility for supporting the entire solution, which is based on NetApp technology. This deal includes a five-year support agreement, with an option of extension to seven years.

Paragon Group project for IT infrastructure transformation

Paragon Group has undergone strong growth and needed a more flexible IT infrastructure offering opportunities for expansion so that it could continue its expansion in its specialist field of finance. B2net was awarded the contract and has supplied a project which included design, implementation, networks and virtualisation of a storage solution.

• Major contract with Norsk Tipping Norsk Tipping has extremely stringent requirements in respect of uptime, security and flexibility. Proact has installed storage capacity of around 120 terabytes in each of the two new data halls constructed by the clients. A further 600 terabytes of capacity are also included backup purposes. Responsibility for training, testing, documentation, support and maintenance will also be supplied by Proact as part of the deal, which will be worth up to NOK 30 million over a period of three years.
• Storage solution to Oulu in Finland Proact is supplying a new storage solution to Oulu in northern Finland. This solution is based on EMC technology, with a capacity of around 100 terabytes. The most critical element of the delivery was the transfer of data from the old storage system to the new one, which took place without problems. This enormous increase in capacity can be exemplified by looking at the time required for calculating the salaries of the city's 9,000 employees, which was halved.
• Awards from NetApp

Proact in the Netherlands has been named "NetApp Partner of the Year" and "NetApp Visionary Partner of the Year" for 2011. The new Proact which came into being as of the acquisition of Databasement in January 2011 was an enormous contributory factor in this success. "These awards clarify Proact's vision on cloud services. Proact achieved its first successes while others were still at the planning stage," says Peter Wilbrink, CEO of NetApp in the Netherlands.

Social media becoming more common at Swedish companies Three out of ten Swedish companies use social media and chat internally with a view to relieving the load on their IT systems and handling rapidly growing quantities of information. These is just one of the findings of the Proact Storage Barometer,

a survey involving IT managers from 100 listed companies and authorities. Information volumes are increasing enormously, and unstructured information, such as in e-mail and file directories, is growing most quickly. One of the solutions for managing this avalanche of information involves using social media and chats internally.

Comprehensive income

Profit before tax amounted to SEK 13.4 (25.5) million for the first six months of 2011. This profit includes non-recurring acquisition costs of SEK 10.7 million and planned depreciation of acquired intangible assets of SEK 6.7 million.

The profitability of BU North is lower than in the same period last year. Profits in Finland are lower than last year.

BU Benelux and Spain is demonstrating a positive result; a strong feature in a period which has been characterised largely by integration work.

Within BU West, Denmark has delivered a negative result. Measures have been implemented which will take effect over the second six months of 2011.

The integration of Czech company Storyflex has had an adverse effect on BU East over the period.

Profit before tax per Business Unit	Jan-Jun 2011	Jan-Jun 2010
North	20.6	25.5
Benelux and Spain	4.7	0.5
West	3.2	2.1
East	-4.2	1.8
Proact Finance	-1.0	-0.6
Groupwide/elim.	-9.9	-3.8
Comprehensive income
before tax	13.4	25.5

During the second quarter, profit before tax amounted to SEK 10.0 (16.0) million. This profit includes non-recurring acquisition costs of SEK 7.3 million and planned depreciation of acquired intangible assets of SEK 4.4 million.

Profit before tax per Business Unit	Apr-Jun 2011	Apr-Jun 2010
North Benelux and Spain	11.3 4.1	16.3 1.3
West	3.8	2.3
East	-1.2	-0.1
Proact Finance	-1.0	-0.4
Groupwide/elim.	-7.0	-3.4
Comprehensive income before tax	10.0	16.0

Balance sheet and cash flow

Cash and equivalents amounted to SEK 57 million on 30 June 2011. Of total bank overdraft facilities of SEK 139 million, SEK 30 million has been utilised. Net liabilities amounted to SEK 162 million. Bank loans amount to SEK 189 million, of which SEK 162 million relates to the acquisition of B2net in the United Kingdom. This loan is associated with the usual lending terms and will be repaid in five to seven years.

Financial position	30 Jun 2011	30 Jun 2010	31 Dec 2010
Cash and cash equiv alents	57	69	73
Bank overdraft facili ties	-30	-	-
Interest-bearing liabili ties	-189	-5	-4
Net cash/net liability	-162	64	69
Unutilised bank over draft facilities	109	41	45
Total bank overdraft facilities	139	41	45

The cash flow for the first six months of the year was SEK -17.3 million. The cash flow includes dividends of SEK 14.4 million. Investments in tangible fixed assets amount to SEK 41.7 (14.4) million, attributable mainly to Proact Finance and operations. Operating activities have contributed SEK 59.8 million.

Cash flow amounted to SEK 8.9 million over the second quarter, of which SEK 76.4 million was from operating activities. The Group's equity ratio at the end of the period was 13 (26) %. This reduction is due largely to acquisitions which have taken place, increasing the balance sheet total while at the same time affecting profit due to acquisition costs.

Buy-back of own shares

At the Annual General Meeting held on 04 May 2011, the Board of Directors was authorised to acquire up to 10 % of the company's shares by the next Annual General Meeting. Up to and including 30 June 2011, no shares have been bought back under this authorisation.

Within the previous authorisation from the Annual General Meeting which took place on 18 May 2010, 154 300 shares, or 1.7 % of the total number of shares, have been acquired at an average price of SEK 91. These shares are still in Proact's possession.

Employees

The average number of annual employees over the first six months amounted to 513 (319), and 602 (318) over the second quarter.

On 30 June, the company employed 623 (328) people.

The parent company in brief

The Parent Company's revenues for the first six months of the year amounted to SEK 28.5 (17.6) million and to SEK 16.5 (8.7) million for the second quarter.

Profit before tax for the first six months amounted to SEK -4.5 (3.4) million, and SEK 0.7 (4.8) million over the second quarter. The parent company's liabilities in a joint group currency account amounted to SEK 80.0 (49.0) million as at 30 June.

At the end of the period, the number of persons employed by the parent company totalled 8 (7). The Parent Company's operations have remained unchanged over the period. There

have been no significant transactions with related parties.

OTHER INFORMATION

Acquisitions which have taken place have increased Proact's indebtedness and reduced its equity ratio. This has resulted in an increase in interest rate risk, currency exchange risk and liquidity risk.

No closely related transactions, other risks or uncertainty factors have altered over the period, by comparison with those commented upon in the last Annual Report issued.

This half-yearly report has not been audited.

Annual General Meeting on 4 May 2011

All Board members - Anders Hultmark, Christer Holmén, Eva Elmstedt, Mikael Gottschlich and Roger Bergqvist - were re-elected, and Anders Hultmark was appointed Chairman of the Board.

A decision was made to pay a dividend of SEK 1.50 (1.35) per share.

The Board members and Managing Director were granted discharge from liability for the 2010 business year

For further information on the general meeting and the minutes from this meeting, please see the company's website at www.proact.se

Forthcoming reports

20 Oct 2011	Interim report, Q3 2011
15 Feb 2012	Year-end report 2011

For further information, please contact:

Olof Sand, MD Telephone: +46 (0) 8 410 666 82, e-mail: olof.sand@proact.se Hans Åkerlund, IR Telephone: +46 (0) 8 410 667 50, e-mail: hans.akerlund@proact.se Jonas Persson, CFO Telephone: +46 (0) 8 410 666 90, e-mail: jonas.persson@proact.se

The Board of Directors and the Managing Director guarantee that this half-yearly report provides a true and fair view of the activities, position and profits of Proact and the Group. No new risks or uncertainty factors have arisen over the first six months of the year, by comparison with those commented upon in the last Annual Report issued.

The information in this half-yearly report is such information as Proact IT Group (Publ) shall publish in accordance with lagen om värdepappersmarknad, the Securities Market Act, and/or lagen om handel med finansiella instrument, the Act on Trading in Financial Instruments. This information was submitted for publication at 12:00 (CET) on 12 July 2011.

Kista, 12 July 2011

Proact IT Group AB (publ)

Olof Sand Anders Hultmark

Managing Director Chairman of the Board

Christer Holmén Eva Elmstedt

Mikael Gottschlich Roger Bergqvist

FINANCIAL REPORTS (SEK m)

Consolidated statement of comprehensive income

	Note	3 mths	3 mths	6 mths	6 mths	12 mths	12 mths
		Apr-Jun	Apr-Jun	Jan-Jun	Jan-Jun	Jul-Jun	Jan-Dec
		2011	2010	2011	2010	2010/2011	2010
System income		394.7	239.3	654.3	443.3	1,134.4	923.4
Service income		214.7	119.1	350.1	232.3	578.0	460.2
Other revenue		1.5	0.4	2.5	1.0	5.0	3.5
Revenues	3	610.9	358.8	1,006.9	676.6	1,717.4	1,387.1
Cost of goods and services sold		-479.3	-274.1	-779.5	-516.9	-1,310.4	-1,047.8
Gross profit		131.6	84.7	227.4	159.7	407.0	339.3
Sales and marketing expenses		-70.0	-44.0	-130.4	-84.8	-217.5	-171.9
Administration expenses		-48.1	-23.5	-78.9	-47.9	-126.3	-95.3
Operating profit/loss, EBIT	4	13.5	17.2	18.1	27.0	63.2	72.1
Net financial items		-3.5	-1.2	-4.7	-1.5	-5.2	-2.0
Comprehensive income before tax		10.0	16.0	13.4	25.5	58.0	70.1
Income tax	5	-3.7	-4.4	-4.6	-7.0	-15.2	-17.6
Comprehensive income for the period	6	6.3	11.6	8.8	18.5	42.8	52.5
Other total comprehensive income
Net result, cash flow hedge		-0.2	-	-0.2	-	-0.2	-
Tax effect, cash flow hedge		0.1	-	0.1	-	0.1	-
Translation differences		7.7	-2.0	5.8	-6.9	-0.1	-12.8
Total comprehensive income for the		13.9	9.6	14.5	11.6	42.6	39.7
period
Comprehensive income for the period at tributable to:
Parent company's shareholders		4.0	11.0	5.8	18.0	38.2	50.4
Holdings without a controlling influence		2.3	0.6	3.0	0.5	4.6	2.1
Total comprehensive income for the period attributable to:
Parent company's shareholders		11.3	9.0	11.4	11.3	38.0	37.9
Holdings without a controlling influence		2.6	0.6	3.1	0.3	4.6	1.8

Data per share

	3 mths Apr-Jun 2011	3 mths Apr-Jun 2010	6 mths Jan-Jun 2011	6 mths Jan-Jun 2010	12 mths Jul-Jun 2010/2011	12 mths Jan-Dec 2010
Profit per share for the period pertaining to the Parent Com pany's shareholders, SEK	0.48	1.18	0.64	1.93	4.16	5.43
Equity per share, SEK	19.99	18.24	19.59	18.24	19.99	19.93
Cash flow from current opera tions per share, SEK	8.32	0.72	6.51	1.40	11.99	6.85
Number of shares at the end of the period excluding bought back shares, units	9,179,586	9,333,886	9,179,586	9,333,886	9,179,586	9,179,586
Weighted average number of shares excluding bought-back shares, units	9,179,586	9,333,886	9,179,586	9,351,892	9,193,219	9,279,372

Proact has not issued any share options or conversion rights which could give rise to dilution.

Key ratios and figures	3 mths Apr-Jun 2011	3 mths Apr-Jun 2010	6 mths Jan-Jun 2011	6 mths Jan-Jun 2010	12 mths Jul-Jun 2010/2011	12 mths Jan-Dec 2010
Revenues, SEK m	611	359	1,007	677	1,717	1,387
EBITDA, SEK m	31.3	22.5	48.8	37.1	106.6	94.9
EBITDA margin, %	5.1	6.3	4.8	5.5	6.2	6.8
EBITA, SEK m	19.0	18.4	27.1	29.4	74.6	76.9
EBITA margin, %	3.1	5.1	2.7	4.3	4.3	5.5
EBIT, SEK m	13.5	17.2	18.1	27.0	63.2	72.1
EBIT margin, %	2.2	4.8	1.8	4.0	3.7	5.2
Profit before tax, SEK millions	10.0	16.0	13.4	25.5	58.0	70.1
Net margin, %	1.6	4.5	1.3	3.8	3.4	5.1
Profit after tax, SEK m	6.3	11.6	8.8	18.5	42.8	52.5
Profit margin, %	1.0	3.2	0.9	2.7	2.5	3.8
Equity ratio, %	13.1	25.5	13.1	25.5	13.1	21.4
Capital turnover rate, times	0.5	0.5	0.9	0.9	1.6	1.7
Return on equity, %	3.4	6.6	4.7	10.5	23.7	28.6
Return on capital employed, %	4.1	9.6	6.3	15.0	22.1	38.8
Investments in property, plant and equipment, SEK	32.2	7.1	41.7	14.4	67.1	39.8
millions Profit before tax per employee, SEK thousands	17	50	26	80	137	216
Average number of employees on annual basis	602	318	513	319	422	325

For a five-year review, see Note 9. Definitions of key ratios and figures are set out in the Annual Report for 2010 and Note 10. Consolidated Balance Sheet

	Note	2011	2011	2010	2010
		30 Jun	31 Mar	31 Dec	30 Jun
ASSETS
Fixed assets
Goodwill		252.1	143.0	75.1	75.3
Other intangible non-current assets	4	185.8	102.7	16.2	19.1
Tangible fixed assets	4	127.0	87.8	45.8	32.9
Other long-term receivables		18.9	15.4	10.7	7.5	Co
Deferred tax receivables	5	30.9	30.0	28.0	33.0	ns
Current assets						ol
Inventories		41.2	18.0	9.8	9.7
Trade and other receivables		723.6	556.3	612.4	428.4	ida
Cash and cash equivalents		57.3	46.1	73.0	69.0	ted
						cas
Total assets		1,436.8	999.3	871.0	674.9	h
						flo
EQUITY AND LIABILITIES						w
Equity pertaining to the Parent Company's sharehold ers		179.9	183.1	183.0	170.3	sta
Equity pertaining to holdings without a controlling		9.0	4.0	3.5	2.0	te
influence Equity, total		188.9	187.1	186.5	172.3	me
						nt
Long-term liabilities
Provision		0.8	0.7	0.7	-
Long term, interest-bearing liabilities		219.1	84.1	3.9	5.0
Long term, non-interest bearing liabilities		41.8	46.9	1.6	2.0
Deferred tax liabilities	5	51.5	26.7	4.9	5.7
Current liabilities
Short term, non-interest bearing liabilities		934.7	653.8	673.4	489.9
Total equity and liabilities		1,436.8	999.3	871.0	674.9

Consolidated cash flow statement (summary)	3 mths Apr-Jun 2011	3 mths Apr-Jun 2010	6 mths Jan-Jun 2011	6 mths Jan-Jun 2010	12 mths Jul-Jun 2010/2011	12 mths Jan-Dec 2010
Comprehensive income for the period	6.3	11.6	8.8	18.5	42.8	52.5
Adjustment for items not included in cash flow:
Depreciations and write-downs, fixed assets	17.4	5.3	30.4	10.0	43.2	22.8
Other adjustments	-8.5	4.6	-13.0	8.9	0.9	22.8
Cash flow before changes in working capital	15.2	21.5	26.2	37.4	86.9	98.1
Change in working capital	61.2	-14.8	33.6	-24.3	23.4	-34.5
Cash flow from current operations	76.4	6.7	59.8	13.1	110.3	63.6
Acquisition of businesses	-123.4	-0.4	-162.6	-0.4	-163.1	-0.9
Capital expenditure on tangible fixed assets	-32.2	-7.1	-41.7	-14.4	-67.1	-39.8
Other cash flow from investment activities	0.0	-0.0	0.0	0.1	-0.4	-0.3
Cash flow from investment activities	-155.6	-7.5	-204.3	-14.7	-230.6	-41.0
Dividends	-13.8	-12.6	-13.8	-12.6	-13.8	-12.6
Dividends to holdings without a controlling influence	-0.6	-2.1	-0.6	-2.1	-0.6	-2.1
Buy-back of own shares	-	-	-	-5.2	-14.0	-19.2
Change in bank overdraft facilities	-35.6	-	7.1	-	7.1	-
Loans taken/repaid	138.1	-0.5	134.5	-1.0	133.4	-2.1
Cash flow from financing activities	88.1	-15.2	127.2	-20.9	112.1	-36.0
Change in cash and equivalents	8.9	-16.0	-17.3	-22.5	-8.2	-13.4
Cash and equivalents at beginning of the period	46.1	86.6	73.0	97.4	69.0	97.4
Exchange rate differences in cash and cash equiva lents	2.3	-1.6	1.6	-5.9	-3.5	-11.0
Cash and equivalents at end of the period	57.3	69.0	57.3	69.0	57.3	73.0

Consolidated Statement of Changes in Equity

		Attributable to the parent company's shareholders						Total share holders' equity
	Share capital	Other capital contribu tions	Translation of foreign subsidiaries	Hedging reserve	Loss brought forward incl. year's total result	Total
1 January 2011	10.6	297.9	-5.7	-	-119.9	183.0	3.5	186.5
Total comprehensive income for the period			5.6	-0.1	5.9	11.4	3.1	14.5
Holdings without a controlling influence on acquisition							3.0	3.0
Financial liability to holdings without a controlling influence					-0.8	-0.8		-0.8
Profit attributable to holdings without a controlling influence					0.8	0.8	-0.8	-
Translation of profit attributa ble to holdings without a
controlling influence					-0.8	-0.8	0.8	-
Dividends Dividends to holdings without					-13.8	-13.8		-13.8
a controlling influence							-0.6	-0.6
30 Jun 2011	10.6	297.9	-0.1	-0.1	-128.8	179.9	9.0	188.9

Holdings without a controlling influence: Proact Latvia Ltd, Latvia 15 %, Proact Lietuva UAB, Lithuania 26.14 %, Proact Netherlands B.V. 49 %, Proact Estonia AS 30 % and Proact IT UK Ltd 25 %.

	Attributable to the parent company's shareholders					Attributable to holdings without a controlling influence	Total share holders' equity
	Share capital	Other capital contribu tions	Translation of foreign subsidiaries	Hedging reserve	Loss brought forward incl. year's total result	Total
1 January 2010	10.6	297.9	6.8	-	-138.5	176.8	3.8	180.6
Total comprehensive income for the period			-6.7		18.0	11.3	0.3	11.6
Reduction of share capital	-0.4				0.4	-		-
Bonus issue	0.4				-0.4	-		-
Dividends					-12.6	-12.6		-12.6
Dividends to holdings without a controlling influence							-2.1	-2.1
Buy-back of own shares *					-5.2	-5.2		-5.2
30 June 2010	10.6	297.9	0.1	-	-138.3	170.3	2.0	172.3

Holdings without a controlling influence: Proact Latvia Ltd, Latvia 15 %, Proact Lietuva UAB, Lithuania 26.14 %, and Proact Netherlands B.V. 49 %, and Proact Estonia AS 30%. * including buy-back costs of SEK 8 thousand

Income statement for Parent Company

	3 mths Apr-Jun 2011	3 mths Apr-Jun 2010	6 mths Jan-Jun 2011	6 mths Jan-Jun 2010	12 mths Jul-Jun 2010/2011	12 mths Jan-Dec 2010
Revenues	16.5	8.7	28.5	17.6	49.1	38.2
Cost of goods and services sold	-	-	-	-	-	-
Gross profit	16.5	8.7	28.5	17.6	49.1	38.2
Administration expenses	-15.5	-9.5	-32.2	-19.4	-48.1	-35.3
Operating profit	1.0	-0.8	-3.7	-1.8	1.0	2.9
Net financial items	-0.3	5.6	-0.8	5.2	16.6	22.6
Comprehensive income before tax	0.7	4.8	-4.5	3.4	17.6	25.5
Income tax	0.2	0.4	1.6	0.7	0.5	-0.4
Comprehensive income for the period	0.9	5.2	-2.9	4.1	18.1	25.1

Balance sheet for Parent Company

	2011	2011	2010	2010
	30 Jun	31 Mar	31 Dec	30 Jun
ASSETS
Fixed assets
Shares in Group companies	301.0	292.4	151.6	150.7
Current receivables from Group companies	123.7
Deferred tax receivables	9.7	9.4	8.0	9.1
Current receivables	4.6	4.8	4.8	5.0
Current assets
Trade and other receivables	46.4	43.0	30.5	23.3
Total assets	485.4	349.6	194.9	188.1
EQUITY AND LIABILITIES
Restricted equity	38.9	38.9	38.9	38.9
Non-restricted equity	55.7	68.6	72.4	65.4
Equity, total	94.6	107.5	111.3	104.3
Long-term liabilities
Bank overdraft facilities	-	28.1	-	-
Current liabilities to Group companies	7.9	7.9	7.9	7.9
Long term, interest-bearing liabilities	162.4	-	-	-
Long term, non-interest bearing liabilities	31.6	37.4	-	-
Current liabilities
Group currency account	80.0	71.2	43.7	49.0
Current non-interest-bearing liabilities	108.9	97.5	32.0	26.9
Total equity and liabilities	485.4	349.6	194.9	188.1

EXPLANATORY INFORMATION

Note 1. General information

Proact IT Group AB (publ) (co. reg. no. 556494-3446) has its registered office in the municipality of Stockholm. Since July 1999, the Company has been listed on Nasdaq OMX Stockholm and the Small Cap list under the PACT symbol.

Note 2. Accounting policies

The consolidated accounts for the half-yearly report, like the annual report for 2010, have been compiled in accordance with International Financial Reporting Standards (IFRS) as endorsed by the EU, and the Swedish Annual Accounts Act. The Parent Company's accounts have been compiled in accordance with the Annual Accounts Act and the Swedish Financial Reporting Board's recommendation RFR 2 (Accounting for Legal Entities).

The present half-yearly report has been prepared in accordance with IAS 34, Interim reporting, and the Swedish Company Accounts Act. The term "IFRS" in this document includes the application of IAS and IFRS, as well as the interpretations of these standards as published by the IASB's Standards Interpretation Committee (SIC) and Internal Reporting Interpretations Committee (IFRIC).

For a truer and fairer view, including acquisitions which have taken place over the period, the company has opted to report depreciation and write-down of fixed assets (see note 4) in the "Cost of goods and services sold" line. In the latest annual report issued, for 2010, these expenses were reported in the "Administration expenses" line. All periods have been translated in this report according to this principle. Furthermore, the company has altered its segment division at the start of the year (see note 6). The Group otherwise applies the same accounting principles as those described in the annual report for 2010.

Note 3. Turnover by business area	3 mths	3 mths	6 mths	6 mths	12 mths	12 mths
	Apr-Jun	Apr-Jun	Jan-Jun	Jan-Jun	Jul-Jun	Jan-Dec
	2011	2010	2011	2010	2010/2011	2010
Telecoms	89	60	151	136	335	320
Retail and wholesale trade and services	76	51	260	102	324	166
Public sector	107	85	191	169	306	284
Oil, energy	49	71	91	110	270	289
Manufacturing industry	146	56	129	84	223	178
Banking, finance	97	17	114	41	146	73
Media	16	12	25	18	62	55
Other	31	7	46	17	51	22
Total	611	359	1,007	677	1,717	1,387

Note 4. Depreciation and write-down of	3 mths	3 mths	6 mths	6 mths	12 mths	12 mths
fixed assets	Apr-Jun 2011	Apr-Jun 2010	Jan-Jun 2011	Jan-Jun 2010	Jul-Jun 2010/2011	Jan-Dec 2010
Depreciation of intangible fixed assets	-5.5	-1.3	-9.0	-2.4	-11.4	-4.8
Depreciation of tangible fixed assets	-12.3	-4.1	-21.7	-7.7	-32.0	-18.0
Total	-17.8	-5.4	-30.7	-10.1	-43.4	-22.8

Note 5. Income tax

The Group's tax expense includes total current tax and deferred tax calculated on the basis of applicable tax rates in the respective countries. The revised tax cost over the first six months amounts to SEK 4.6 (7.0) million. Taxes paid over the period amount to SEK 10.4 (5.3) million. The Group's total deductions for losses amount to SEK 92 million. It has been assessed that SEK 92 million of this can be made use of against future taxable profits and the tax effect has been recorded as a deferred tax claim.

Note 6. Operating segments

As of the first quarter of 2011, the Managing Director has decided that the company will be managed and reported by Business Unit (BU) instead of by country as was the case previously. This new division means a change in unit division, and so comparison information has been recalculated. The new business units are as follows:

North:	Finland, Norway and northern Sweden
Benelux and Spain:	The Netherlands, Belgium and Spain
West:	Denmark, southern Sverige and the United Kingdom
East:	Estonia, Latvia, Lithuania, Czech Republic and Slovakia
Proact Finance:	Proact's finance company under its own auspices is reported sepa rately as this company supports all geographical regions.

Jan-Jun 2011	North	West	Benelux /Spain	East	Proact Finance	Group wide & elim.	Group
Total income Comprehensive in come before tax	486.0 20.6	323.4 3.2	148.9 4.7	53.0 -4.2	13.3 -1.0	-17.7 -9.9	1,006.9 13.4
Tax Comprehensive income for the peri od							-4.6 8.8

Jan-Jun 2010	North	West	Benelux /Spain	East	Proact Finance	Group wide & elim.	Group
Total income Comprehensive in come before tax	457.2 25.5	162.5 2.1	43.0 0.5	29.9 1.8	3.5 -0.6	-19.5 -3.8	676.6 25.5
Tax Comprehensive income for the peri od							-7.0 18.5

Note 7. Ten biggest shareholders

Stake in % according to Euroclear Sweden AB	30 Jun 2011	31 Dec 2010
Skandia Liv	10.4	10.4
IGC Industrial Growth Co. AB	10.1	10.1
Swedbank Robur Småbolagsfonder	8.7	8.7
Skagen Fonder	7.5	7.9
Thyra Hedge	5.4	5.3
Öresund Investment AB	5.3	5.3
SEB Fonder	4.5	4.6
Key	3.9	2.4
Didner & Gerge Småbolag	2.5	2.8
Nordea Fonder	2.1	2.6
Other	39.6	39.9
Total	100.0	100.0

Following buy-backs, the company owns 154 300 of its own shares, equivalent to 1.7 % of the total number of outstanding shares

Note 8. Acquisitions

B2net Ltd.

Proact, together with an external party, has formed a company (Proact IT UK Ltd.) in which Proact has a 75 % holding. On 8 April, this company acquired 100 % of B2net Ltd. for a purchase price of GBP 16 million. The price amounts to 7 times the B2net EBITA and 0.3 times its revenues. Proact has the opportunity to acquire the remaining 25 % over the next five years for a maximum of GBP 4 million. The company has been consolidated and incorporated into Proact as of the second quarter of 2011. B2net has around 165 employees in five locations in the United Kingdom, with revenues of around SEK 500 million.

The preliminary acquisition calculation in respect of B2net which Proact carried out includes intangible assets, customer relations, which will be depreciated over a ten-year period. Goodwill is attributable to assessed and evaluated future sales and marketing opportunities, cost savings and other synergy effects. No part of the goodwill is expected to be tax-deductible.

The preliminary actual value of identified assets and liabilities at the time of acquisition of B2net amounted to the following:

SEK m	Actual value on acquisi tion
Assets
Customer relations	86.9
Fixed assets	22.3
Current receivables	199.8
Cash and cash equivalents	1.2
	310.2
Liabilities
Current liabilities	236.1
Long-term liabilities	2.3
Deferred tax liability	22.6
	261.0
Acquired identified net assets	49.2
Goodwill	114.1
Total purchase price	163.3
Analysis of purchase price:
Cash payment	124.6
Liability	38.7
Total purchase price	163.3

Storyflex

On 20 October 2010, Proact entered into an agreement to purchase 60 % – with an option of acquiring the remaining 40 % – of Storyflex Inc., a company operating in the Czech Republic and Slovakia. This option has been included in the balance sheet as a long-term financial liability.

Operations will be run under the name Proact Czech Republic Ltd. The company has 35 employees over four offices in Prague, Ostrava, Brno and Bratislava. Sales over the last business year (April 2009-March 2010) amounted to more than SEK 100 million. The purchase price of approximately SEK 11.9 million was paid in cash on 31 January 2011.

The legal process was completed during the first quarter of 2011, at which time the acquired business was consolidated into Proact. Further information and a preliminary acquisition calculation are shown in the annual report for 2010, which can be found at the Proact website: www.proact.se

Databasement

On 10 January 2011, an agreement was entered into concerning the purchase of Dutch company Databasement B.V., operating in the Netherlands, Belgium and Spain. As a result of this agreement, Proact owns 100 % of the business relating to Managed Services, cloud services. Proact owns 82 % of other business in the Netherlands and Belgium and 85 % of the business in Spain. Local management and employees are holders without a controlling influence.

Moreover, this acquisition means that Proact owns 40 % of a software product known as InControl, which was developed by the company itself. Databasement has a total of 52 employees and revenues of around SEK 180 million. The purchase price, amounting to a total of SEK 121.1 million, will be paid in cash at a total of SEK 90 million over three equal payments over the next twelve months and an estimated additional purchase price of SEK 31.1 million (current value) in three years' time. This additional purchase price is based on estimated growth in revenues and comprehensive income over the next three years. The companies acquired were consolidated into Proact as of the first quarter of 2011. Further information and a preliminary acquisition calculation are shown in the annual report for 2010, which can be found at the Proact website: www.proact.se

Note 9. Five-year summary

	Jul-Jun 2010/2011	Jan-Dec 2010	Jan-Dec 2009	Jan-Dec 2008	Jan-Dec 2007
Revenues, SEK m	1,717.4	1,387.1	1,252.7	1,044.2	864.8
EBITDA, SEK m	106.6	94.9	76.7	59.6	51.8
EBITDA margin, %	6.2	6.8	6.1	5.7	6.0
EBITA, SEK m	74.6	76.9	65.3	51.5	44.7
EBITA margin, %	4.3	5.5	5.2	4.9	5.2
EBIT, SEK m	63.2	72.1	60.0	46.8	40.3
EBIT margin, %	3.7	5.2	4.8	4.5	4.7
Profit before tax, SEK millions	58.0	70.1	60.1	50.1	40.7
Net margin, %	3.4	5.1	4.8	4.8	4.7
Profit after tax, SEK m	42.8	52.5	52.4	38.7	31.9
Profit margin, %	2.5	3.8	4.2	3.7	3.7
Equity ratio, %	13.1	21.4	24.1	24.8	30.6
Capital turnover rate, times	1.6	1.7	1.8	1.8	1.7
Return on equity, %	23.7	28.6	30.7	24.4	20.2
Return on capital employed, %	22.1	38.8	35.4	32.4	26.6
Investments in property, plant and equipment, SEK millions	67.1	39.8	22.5	11.5	9.2
Profit before tax per employee, SEK thousands	137	216	191	168	155
Average number of employees on annual basis	422	325	315	299	262
Earnings per share for the period, SEK *)	4.16	5.43	5.22	3.68	2.80

*) Proact has not issued any share options or conversion rights which could give rise to dilution. The number of shares is calculated excluding bought-back shares.

Note 10. Definitions

EBITDA EBITDA margin	Profit before depreciation (tangible and intangible assets), net financial items and tax EBITDA expressed as a percentage of revenues
EBITA	Profit after depreciation of tangible fixed assets but before depreciation of intangible assets, net financial items and tax
EBITA margin	EBITA expressed as a percentage of revenues
EBIT	Operating profit before net financial items and tax
EBIT margin	EBIT expressed as a percentage of revenues
Net margin %	Profit before tax expressed as a percentage of revenues
Profit margin	Profit after tax expressed as a percentage of revenues
Equity ratio	Equity including minority interests as a percentage of balance sheet total
Capital turnover rate	Revenues expressed as a percentage of the average balance sheet total
Return on equity	Profit for the period after tax, expressed as a percentage of average equity
Capital employed	Balance sheet total minus non-interest bearing liabilities inclusive of deferred tax liabilities
Return on capital em ployed	Profit after net financial items plus financial expenses, expressed as a percentage of the average capital employed
Profit/loss per employee	Profit/loss before tax divided by the average number of annual employees

Proact IT Group AB [publ]
Box 1205	Tel.: +46 8 410 666 00	Co. reg. no.: 556494-3446
Isafjordsgatan 35	Fax: +46 8 410 668 80	Headquarters: Stockholm
SE-164 28 KISTA	E-mail: itgroup@proact.se	www.proact.se

SE-164 28 KISTA E-mail: itgroup@proact.se www.proact.se