INTENTIA 2003 Right to Attend - s3. · PDF fileOrders Received R12 License Revenue R12 Backlog...

Intentia International

Vendevägen 89

Box 596

SE-182 15 Danderyd

Sweden

Tel +46 8 5552 5000

Fax +46 8 5552 5999

Annual General Meeting

The Group’s Annual General Meeting will be held at 2:00 PM on Tuesday,

May 11, 2004, at Intentia’s headquarters, Vendevägen 89, Danderyd, Sweden.

Notification

Stockholders who wish to participate in the Annual General Meeting must notify

Intentia International AB (publ). no later than Friday, May 7, 2004, by mailing the

reply card included in the annual report or sending a fax to +46 8 5552 5999.

Right to Attend

Stockholders entered in the register maintained by VPC AB (Swedish Securities

Register Center) on Friday, April 30, 2004, are entitled to participate in the Annual

General Meeting. Any stockholder with stock registered in the name of a trustee

must have the trustee temporarily register the stock in the stockholder’s own name

to be entitled to participate in the meeting. Such stockholders should request the

transfer of registration well in advance of Friday, April 30, 2004.

2003 Financial Information

Information on the Group’s development during 2004 will be provided as follows:

Interim report for January–March 2004: April 30, 2004

Interim report for January–June 2004: July, 23 2004

Interim report for January–September 2004: October 27, 2004

Announcement of Final Accounts 2004: January/February, 2005.

Financial reports as well as other information relevant to the Group are also

published on Intentia’s Web site: www.intentia.com

Investor Relations

[email protected]

+46 8 5552 5766

INT

EN

TIA

20

03

INTEN

TIA 2003

Int-03-083-1-en

cover2003.qxd 04-03-25 14.43 Page 1

Intentia International

Vendevägen 89

Box 596

SE-182 15 Danderyd

Sweden

Tel +46 8 5552 5000

Fax +46 8 5552 5999

Annual General Meeting

The Group’s Annual General Meeting will be held at 2:00 PM on Tuesday,

May 11, 2004, at Intentia’s headquarters, Vendevägen 89, Danderyd, Sweden.

Notification

Stockholders who wish to participate in the Annual General Meeting must notify

Intentia International AB (publ). no later than Friday, May 7, 2004, by mailing the

reply card included in the annual report or sending a fax to +46 8 5552 5999.

Right to Attend

Stockholders entered in the register maintained by VPC AB (Swedish Securities

Register Center) on Friday, April 30, 2004, are entitled to participate in the Annual

General Meeting. Any stockholder with stock registered in the name of a trustee

must have the trustee temporarily register the stock in the stockholder’s own name

to be entitled to participate in the meeting. Such stockholders should request the

transfer of registration well in advance of Friday, April 30, 2004.

2003 Financial Information

Information on the Group’s development during 2004 will be provided as follows:

Interim report for January–March 2004: April 30, 2004

Interim report for January–June 2004: July, 23 2004

Interim report for January–September 2004: October 27, 2004

Announcement of Final Accounts 2004: January/February, 2005.

Financial reports as well as other information relevant to the Group are also

published on Intentia’s Web site: www.intentia.com

Investor Relations

[email protected]

+46 8 5552 5766

INT

EN

TIA

20

03

INTEN

TIA 2003

Int-03-083-1-en

cover2003.qxd 04-03-25 14.43 Page 1

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Contents

Business Highlights 2003 7

Goals and Strategies 9

A Letter from Intentia’s CEO 11

Annual Report

Intentia Stock 16

2003 in Brief 21

Management’s Discussion and Analysis 2003 22

Group Income Statement 38

Balance Sheet 39

Changes in Stockholders’ Equity 41

Cash Flow 42

Parent Company Income Statement 43

Balance Sheet 44

Changes in Stockholders’ Equity 46

Cash Flow 47

Notes and Accounting Principles 48

Audit Report 64

Definitions of Financial Ratios 65

Board of Directors and Auditors 66

Group Management 68

Yearly Summary 70

Yearly Summary by Quarter 71

6

0

200

400

600

800

1,000

1,200

1,400

SEK million

Orders Received R12 License Revenue R12 Backlog Closing

Q3 ’01Q2 ’01Q1 ’01Q4 ’00Q3 ’00Q2 ’00Q1 ’00Q4 ’99 Q3 ’03 Q4 ’03Q2 ’03Q1 ’03Q4 ’02Q3 ’02Q2 ’02Q1 ’02Q4 ’01

License Revenue and Orders Recieved

SEK million

Consulting Revenue Quarter Consulting Revenue R12 Months

Q3 ’01Q2 ’01Q1 ’01Q4 ’00Q3 ’00Q2 ’00Q1 ’00Q4 ’99 Q3 ’03 Q4 ’03Q2 ’03Q1 ’03Q4 ’02Q3 ’02Q2 ’02Q1 ’02Q4 ’01

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Q3 ’03 Q4 ’03Q2 ’03Q1 ’03Q4 ’02Q3 ’02Q2 ’02Q1 ’02Q4 ’01

7

Business Highlights 2003

• License revenue for the year declined by 17 percent, while consulting revenue declined by21 percent. Orders received increased in the fourth quarter after having declined in thetwo preceding quarters. During the year orders received declined by 8 percent. Intentiaposted an operating loss of SEK 238 million, as net revenue declined 20 percent.

• Consulting cost and indirect expenses decreased on a comparable basis by SEK 640million, or 18 percent. Over the past 18 months they decreased by SEK 829 million.

• Cash flow after investments improved by SEK 169 million to SEK –11 million.Thecontinued focus on working capital management led to a positive change of SEK 201million in net working capital, while cash flow from operations was SEK –38 million.

• Intentia increased stockholders’ equity through a rights offering and repurchased most ofour convertible bond.We raised SEK 401 million in new equity.The repurchase ofconvertible notes and outstanding coupons totaled SEK 338 million. On December 29,2003, the Symphony Technology Group announced a strategic investment of SEK 256million in the company, which was completed in February 2004.

• Intentia’s product portfolio was enhanced with the launch of Movex Java Rental,Webservices Framework,WebSphere-based e-procurement and e-sales applications, MovexOutput Management and Movex Mobile Sales.

• In October 2003, we expanded our existing alliance with IBM.Together we will developan offering that standardizes Movex on IBM’s open technology platform.This alliance willexpand our reach to new mid-market customers.

• Intentia signed 127 new customers during the year. Major new customers included:AlphaManagement GmbH, Haribo GmbH, Hutchinson Technology Inc. and British Nuclear Fuels Ltd.

• We managed over 500 major implementation projects, of which 200 were Java projects.Our successful go-to-market model with e-procurement and e-sales resulted in 76 newcontracts and a solid pipeline in this area.

• During the year, we strengthened Intentia’s operating efficiency.We have largelycompleted the integration of our global organization. Overcapacity is being eliminated,and the costs of transitioning all areas to the Java platform are largely complete.

9

Goals and Strategies

Our OfferingOur value proposition, Pursuing the Perfect Partnership, is all about how we focus on ourcustomers’ objectives, adding real value to their enterprises, securing success and workingtogether for the long-term. It consists of our enterprise application Movex, advancedtechnology, professional services, an integrated global organization and is backed by a solidtrack record of achievements.

We control all aspects of our offering and are able to maintain a coherent, long-termstrategy that provides our customers with stability and a clear roadmap for the future.

Movex is a suite of applications that covers supplier relationship management, customerrelationship management, supply chain management, enterprise management, workplacemanagement and value chain collaboration.

Our professional services focus on designing and implementing optimized and superiorbusiness processes, using Movex as the catalyst for change that drives business integrationand the collaborative business of today.

Our offering is in use by some 3,500 customers in 40 countries and is supported by3,000 employees. It is a global solution that meets the local requirements of our customers,be they legislative, cultural or linguistic.

Our Target GroupWe concentrate on medium sized enterprises in the manufacturing, maintenance, serviceand distribution industries.

Our GoalsOur long-term financial goal is to augment our 2.5 percent share of the enterpriseapplication market to 10 percent while maintaining an operating margin of 15 percent.Thiswill be managed through organic growth and complementary acquisitions of companieswith a solid customer base that can benefit from our offering.We will begin by achieving anoperating margin of at least 5 percent by combining cost efficiency with increased efficiencyin generating revenue.

Our StrategiesWe will achieve our goals by having a clearly differentiated and superior offering focusedon well-defined target groups.We will also

• Ensure that the Pursuing the Perfect Partnership value proposition is superior in achieving the

market’s highest return on investment (ROI) with the lowest risk

• Continue to focus on customer satisfaction and loyalty by providing a superior solution

• Leverage the strength, reach and scale of our integrated and global organization

• Complement organic growth with acquisitions, providing a solid customer base in our target

markets

• Provide customers and stockholders with a high level of security by balancing operational risk

with a solid financial position.

11

A Letter from Intentia’s CEOThe past year was pivotal in the development of Intentia. As 2003 unfolded, it becameclear that we needed to make significant changes in order to preserve our position in themarket and establish a path to renewed profitability. Because of the steps we took, Intentianow commands the necessary resources to be a long-term player in the enterpriseapplications market and to sustain our technology edge. Our actions open the door tonew efforts to increase revenues and earnings in 2004 and beyond.

Last year Intentia attracted 127 new customers, accounting for 28 percent of licenserevenue, carried out over 500 significant projects, and ended the year with a 4 percentincrease in our backlog to SEK 541 million.We achieved a high success rate in competingfor customer projects against other enterprise applications vendors.

Nonetheless, these successes were not enough to stave off a 20 percent decline in netrevenue—largely coming from the consulting side—and a resulting unacceptable operatingloss for the year. Although many factors contributed to the underperformance, the biggestchallenge in generating revenue did not come from other enterprise application vendors,but from our own financial position. Prospective customers expressed concern aboutIntentia’s weak balance sheet and about our ability to be with them through the full lifecycle of their investment. In addition, the economy caused customers to hesitate whenmaking critical procurement decisions and to limit contract size.

We committed to overcome these challenges and to improve our performance bytaking actions to strengthen the company internally without compromising our corecompetitive strengths. Allow me to explain in more detail the actions taken last year andwhere they will lead us.

Our first imperative was to improve our balance sheet, so that customers would haveconfidence in our long-term financial strength. In mid-2003, Intentia increased stockholders’equity through a rights offering and repurchased most of our convertible bond for SEK 338million. In net terms, we raised SEK 401 million in new equity and increased our liquidity bySEK 63 million.

On December 29, 2003, Intentia and the Symphony Technology Group, the Palo Alto-basedsoftware investment fund, announced a strategic investment of SEK 256 million in the company,which was approved by the stockholders in February 2004. Symphony’s management has aclear understanding and vision of the industry, and I expect that their representatives will make asignificant contribution through the board of directors. Symphony has a broad network in theUS market, and access to their network, technologies and products will enhance our total valueproposition. More than anything, Symphony’s long-term commitment to Intentia will furtherstrengthen our financial position and bolster our credibility in the marketplace.

Our second imperative was to cut costs.We put cost efficiency measures high on the agendaand exceeded our targets, reducing costs and expenses on a comparable basis by SEK 640million, or by 18 percent.We were fully aware that the efficiency steps we took would have anegative short-term effect on productivity, but are confident they will create a solid platform forimproved profitability in 2004. Since Intentia began the program to increase efficiency in mid-2002, our annualized break-even point has fallen by SEK 770 million, or 20 percent. In addition toreductions in personnel and general cost containment, a new compensation plan was introducedwhich ties salaries more closely to earnings, thus increasing our financial flexibility.

Last September, I committed to an additional SEK 300 million cost reduction for 2004, and inJanuary we announced the specific measures to accomplish this.We will consolidate businessunits and reduce headcount by another ten percent during the first half of 2004.Thesereductions will affect the entire company and will unquestionably be painful, but they are thefinal step needed to protect Intentia’s financial position and enable us to realize our potential.

The combined effects of the cuts offset 89 percent of the revenue reduction in 2003.Before costs of a once-off nature, operating earnings during the second half of 2003

12

13improved SEK 2 million over the same period of the previous year, after having seen ashortfall of SEK 59 million during the first half of the year. Continued strong focus on cashmanagement resulted in a SEK 169 million improvement in cash flow for the year.We alsomaintained positive net liquidity position throughout the year.

The third major imperative of last year was to strengthen our total offering, both in termsof services and products, in order to deliver the precise value that our customers seek.Wehave largely completed the integration of our global consulting organization, which is expectedto increase the consulting margin from the 2003 level of 11 percent. Overcapacity is beingeliminated, and the costs of transitioning all areas to the Java platform are largely behind us.

Product development is an integral part of our offering and one of Intentia’s corestrengths. Our research and development strategy closely involves our customers. Afterreceiving feedback from over 250 of our Java implementations, for example, we were ableto improve performance and scalability by 30 percent overall and by 50 percent on theIBM xSeries running Microsoft Windows.

In October we expanded our existing alliance with IBM.Within this new framework, wedeveloped a consolidated software offering that standardizes Movex on the IBM opentechnology platform. In addition, we will jointly develop a version of Movex optimized forLinux, an increasingly popular operating system for enterprises. Our Java foundation willnow incorporate the advantages of the power and openness of WebSphere. During theyear, we signed 76 contracts for WebSphere e-procurement and e-sales applications.Thisalliance should provide significant benefits in increasing our attractiveness to and ability toreach new mid-market customers.

Other R&D advances include the release to Beta customers of Intentia’s secondgeneration mobile applications, the launch of a completely new tool, Movex Forms OutputManagement, Movex Java Rental, and the Web services Framework, all of which are basedon Java and XML technologies.

During the course of 2004, I expect that we will announce additional initiatives thatbuild on Intentia’s new, solid foundation.

With the increased financial resources acquired during 2003 and the demonstratedbacking of Symphony, we will no longer be at a competitive disadvantage in marketing tonew customers.

We will be able to continue our product development and accelerate new productlaunches.

I am confident that we will be able to leverage our better financial position and ourstrengths in technology and project execution into higher revenues.This will bolster newefforts to expand the reach of our products which, accompanied by focused considerationof strategic alliances, will further drive sales and market visibility.

We have an excellent offering.The functionality and technology of our Movex suite ofenterprise applications is ideally suited for mid-market companies in the industries that wetarget. Our excellence in consulting implementation and our integrated global networkenable us to establish the ‘perfect partnership’ with our customers by reducing their risk,and ensuring low total cost of ownership and high returns on investment.

The software giants that design their products for the large corporate sector cannotserve the mid-market as well as Intentia, with our complete dedication to this segment andits specific needs.

We will stay the course. Intentia will keep our global presence, our commitment to productdevelopment, and our way of working with customers.We will do what we have been doing,only better. Our customers know they can count on us, through the long term.

Björn AlgkvistPresident and Chief Executive Officer

14

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16

Intentia Stock

Capital Stock

The capital stock in Intentia International AB was SEK 1,097 million at the end of 2003.The total number of shares was 109,719,600, of which 3,403,920 were Series A and106,315,680 were Series B. Each share has a par value of SEK 10. Each Series A sharerepresents ten votes, while each Series B share represents one vote. Series B sharesaccount for 76 percent and Series A shares for 24 percent of the total votes. New stockissued increased the number of shares during the year by 73,146,400, whereby capitalstock rose by SEK 732 million.

Changes in Capital Stock

Increase in Total Share’sIncrease in capital stock capital stock Number of par

Year number of shares SEK million SEK million shares value

1990 Intentia founded 500 0.05 0.05 500 100

1992 New stock issued 1,166 0.1 0.2 1,666 100

1995 New stock issued 1,282 0.1 0.3 2,948 100

1996 New stock issued I 136,000 13.6 13.9 138,948 100

1996 New stock issued II 945 0.1 14.0 139,893 100

1996 10:1 split 1,259,037 – 14.0 1,398,930 10

1996 Bonus issue 12,590,370 125.9 139.9 13,989,300 10

1996 New stock issued III 6,010,700 60.1 200.0 20,000,000 10

1998 New stock issued 4,000,000 40.0 240.0 24,000,000 10

1999 New stock issued 121,000 1.2 241.2 24,121,000 10

2000 New stock issued 190,000 1.9 243.1 24,311,000 10

2001 New stock issued I 4,862,200 48.6 291.7 29,173,200 10

2001 New stock issued II 500,000 5.0 296.7 29,673,200 10

2001 New stock issued III 6,400,000 64.0 360.7 36,073,200 10

2002 New stock issued 500,000 5.0 365.7 36,573,200 10

2003 New stock issued 73,146,400 731.5 1,097.2 109,719,600 10

4,000

8,000

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16,000 50

100

150

200 250 300 350 400

96 97 98 99 00 01 02 03

Intentia

Intentia

Affärsvärlden's IT Index

Affärsvärlden's General Index No. shares traded(thousands, including

4

after market)

(c) SI X

17

New Stock Issued in 2003

During the year, Intentia offered to repurchase convertible notes from their holders at 65percent of the notes’ nominal value plus 5 percent accrued interest.The offer was con-ditional upon obtaining financing by issuing an equivalent number of shares.The offer wasaccepted by 86 percent of the holders, and the issue of new shares upon which the offerwas conditioned was fully subscribed for during July, as a result of which 86 percent ofthe convertible notes were repurchased.That reduced the nominal amount of the con-vertible debt from EUR 60 million to EUR 8 million.The issue of new shares raised SEK401 million for Intentia after issue expenses.The repurchase of convertible notes and out-standing coupons totaled SEK 338 million and the transaction positively impacted liquid-ity by SEK 63 million.

The issue of preferred shares entitled the holder of a Series A or B share to subscribefor two new Series A or B shares respectively at a price of SEK 5.75. Since the issue wascarried out below par value, the difference between the subscription price and par valuewas transferred from the premium fund to capital stock. That amount totaled SEK 311million.

Dividends

Intentia International has not paid any dividends to date.The Board of Directors expectsthe Company’s dividend policy to remain restrictive in the next few years.

Convertible Notes

Intentia issued convertible notes in the euro market during 1999.The notes’ outstandingamount is EUR 8 million and carry 5 percent interest.The loan runs until July 2006 at aconversion price of SEK 105.16 per share based on a SEK-to-the-EUR exchange rate of8.72. If the Intentia share trades at least 8 percent above the conversion price for 20 consecutive sessions, the Company is entitled to call for compulsory conversion when-ever it deems appropriate.The outstanding notes correspond to 679,954 Series B sharesupon full conversion.

Stock-Option Program

In 1998, Intentia adopted a stock-option program, according to which options are issuedat no charge and an exercise price equal to the price of Intentia stock on the issue date.This program, which consists of 200,000 options, is aimed at Intentia employees in coun-tries where capital gains on this type of option are not taxed as income from employ-ment, which entails payroll taxes for the Company. A total of 61,000 options are out-standing.The exercise period for the options expired on February 19, 2004.

Trading Volumes and Stock Price

Intentia’s Series B shares have been traded on the Stockholm Stock Exchange since 1996and appear on its Attract 40 List. Five hundred shares constituted one round lot in 2003.

A total of 114.4 million Intentia shares, valued at SEK 844 million, were traded in 2003.The volume traded corresponded to 104 percent of all outstanding shares at year-endand 108 percent of listed Series B shares. Daily volume averaged 460,000 shares, or SEK3.4 million.

The price of Intentia’s stock fell during the year by 49.8 percent, as opposed to anincrease of 73.8 percent for Affärsvärlden’s IT Index and 29.7 percent for Affärsvärlden’sGeneral Index.

The Intentia share reached its highest price of SEK 14.60 on January 7, while the lowfor the year of SEK 4.50 was on May 26 and 27.The last closing price in 2003 was SEK7.20, corresponding to a market capitalization of SEK 790 million.The average stock pricein 2003, SEK 7.37, was 82 percent less than the average stock price in 2002.

18

Trading Volume and Beta

The Intentia share’s beta was 1.33 compared to Affärsvärlden’s General Index based on250 days and 1.45 based on 48 months.The beta indicates the volatility of Intentia’s stockprice, that is, how closely variations in the price of Intentia stock have corresponded tovariations in the market index.

A stock price that perfectly tracks the market index will have a beta of 1.0. A betabelow 1.0 means that the stock price varies less than the market as a whole. A betaabove 1.0 indicates a greater variation than the market.

Stockholders

At year-end, there were 11,307 stockholders, 6 percent more than at year-end 2002.Institutional stockholders owned 19 percent of the capital, mutual funds 16 percent, andprivate individuals 30 percent.The amount of stock owned at year-end by investors domi-ciled outside Sweden was 35 percent, 17 percentage points more than at year-end 2002.The ten largest stockholders held 36 percent of the capital and 50 percent of the voteson December 31, 2003.

Intentia’s Stockholders on December 31, 2003

Number of shares Percentage ofSeries A Series B Total Capital Votes

Eureka Fonder 12,948,420 12,948,420 11.8 9.2

Intentia profit-sharing fund1) 381,900 7,703,417 8,085,317 7.4 8.2

SEB Fonder 6,675,799 6,675,799 6.1 4.8

Björn Algkvist 2,864,700 3,681,235 6,545,935 6.0 23.0

Robur Fonder 5,109,225 5,109,225 4.7 3.6

Fourth National Pension

Insurance Fund 4,097,700 4,097,700 3.7 2.9

Third National Pension

Insurance Fund 2,320,300 2,320,300 2.1 1.7

Symphony Technology Group 1,949,500 1,949,500 1.8 1.4

Länsförsäkringar Fonder 1,935,860 1,935,860 1.8 1.4

Skandia 157,320 1,431,643 1,588,963 1.4 2.1

3i Euro Trust Plc 1,410,000 1,410,000 1.3 1.0

Bliwa Life Insurance 1,318,580 1,318,580 1.2 0.9

SHB/SPP Fonder 1,188,530 1,188,530 1.1 0.8

Nordea Fonder 1,165,000 1,165,000 1.1 0.8

Second National Pension

Insurance Fund 733,836 733,836 0.7 0.5

Other stockholders 52,646,635 52,646,635 47.8 37.7

Total 3,403,920 106,315,680 109,719,600 100.0 100.0

1) Intentia founded the Intentia profit-sharing fund for its employees in Sweden.The fund has a total of 132 participants.There have been no new

transfers since 1996.

19

Breakdown of Stockholders—Holdings

Percentage of Percentage Number of number of Number of capital Percentage

Number of shares stockholders stockholders of shares capital stock of votes

1–500 5,745 50.7 1,067,618 1.0 0.8

501–1,000 1,898 16.8 1,509,560 1.4 1.1

1,001–5,000 2,479 21.9 6,181,031 5.6 4.4

5,001–10,000 576 5.1 4,486,395 4.1 3.2

10,001–50,000 469 4.1 10,361,732 9.4 7.4

50,001–100,000 53 0.5 3,855,732 3.5 2.7

100,001–500,000 52 0.5 11,499,037 10.5 8.2

500,001–1,000,000 14 0.1 9,439,772 8.6 7.6

1,000,001–5,000,000 18 0.2 37,880,841 34.5 28.0

5,000,001– 3 0.1 23,437,882 21.4 36.6

Total 11,307 100.0 109,719,600 100.0 100.0

The number of stockholders per range of shares differs somewhat from that reported in the “Intentia’s Stockholders on December 31, 2003” table

because of compilations within the SEB and Robur funds.

Breakdown of Stockholders—Concentration

Percentage PercentageConcentration of capital Change of votes Change

10 largest stockholders 36.2 –18.0 50.1 –14.1



Foreign Stockholders—Percent by Country

2003 2002 2001 2000 1999

United Kingdom 12.3 5.4 2.6 1.0 0.8

United States 5.9 3.5 5.2 5.0 3.1

Luxembourg 5.5 2.6 3.2 2.3 2.1

Belgium 3.6 0.6 2.4 0.7 0.8

Norway 3.3 2.5 0.8 0.1 0.3

Financial Data per Share

2003 2002 2001 2000 1999

Earnings per share –6.0 –3.9 –1.9 –14.2 –14.3

Earnings per share

after full conversion –6.0 –3.9 –1.9 –14.2 –14.3

Stockholders’ equity per share 7.6 21.3 23.6 5.5 19.5

Cash flow per

average no. of shares1) –0.2 –4.9 1.8 –24.1 –17.4

Total no. shares (thousands) 109,720 36,573 36,073 24,311 24,121

No. outstanding options

and convertibles (thousands) 741 4,093 6,619 6,041 5,037

1) Cash flow from operating activities and investing activities

20

Brokerage Firms that Evaluated Intentia Stock in 2003

Carnegie

Dresdner Kleinwort Wasserstein

Enskilda Securities

Hagströmer & Qviberg

Handelsbanken Capital Markets

Kaupthing

Redeye

Remium

SG Cowen Securities (London) Ltd

Swedbank

21

2003 in Brief• In a market that remained difficult and unpredictable, Intentia signed agreements with 127

new customers during the year.• Net revenue for 2003 totaled SEK 2,928 million (3,649). License revenue amounted to

SEK 883 million (1,057), while consulting revenue was SEK 2,006 million (2,539).• License orders received came to SEK 904 million (980) for the year, while the backlog of

license orders was SEK 541 million (519) at the end of the year.• The consulting margin for the year was 11 percent, as opposed to 17 percent in 2002.• Costs continued to decrease. Consulting costs and indirect expenses declined by SEK 567

million to SEK 3,106 million (3,673).• Operating earnings amounted to SEK –238 million (–107). A total of SEK 96 million (23)

in write-downs and severance-related expenses were charged to earnings. Adjusted forthese items, operating earnings for the year were SEK –141 million (–84).

• Write-downs totaling SEK 234 million were charged to earnings, of which SEK 31 millionwas charged to operating earnings. Write-downs of financial assets and gains from therepurchase of outstanding convertible notes had a positive impact of SEK 86 million onfinancial items. Write-downs and tax related to the convertible notes transaction addedSEK 179 million to tax expense for the year.

• Earnings after financial items were SEK –191 million (–151), while earnings after taxamounted to SEK –411 million (–144).

• Cash flow after investing activities improved by SEK 169 million to SEK –11 million (–180).• The number of employees decreased by 320 to 2,999 (3,319) at the end of the year.

Five-Year Summary (SEK million)

2003 2002 2001 2000 1999

License orders received 904 980 1,238 1,157 756

License revenue 883 1,057 1,201 1,005 774

Net revenue 2,928 3,649 4,013 3,246 3,080

Net revenue per employee 944 1,083 1,211 960 959

Change from preceding year

License orders received –8% –21% 7% 53% –24%

License revenue –16% –12% 20% 30% –2%

Net revenue –20% –9% 24% 5% 37%

Operating earnings before

depreciation and amortization –47 83 252 –150 –121

Operating earnings –238 –107 100 –290 –242

Operating margin –8% –3% 2% –9% –8%

Earnings after financial items –191 –151 –25 –400 –259

Loss for the year –411 –144 –57 –344 –345

Average number of employees 3,103 3,370 3,314 3,380 3,212

Intentia International AB (publ). Corporate identity 556387-8148

22

Management’s Discussion and Analysis2003Market Trends

The market for enterprise applications has changed character. At one time it was decid-edly a growth sector that concentrated on obtaining new customers, while a high per-centage of sales was attributable to new software licenses. In recent years, the market hasentered a new, more mature phase, the focus increasingly turning to expanding relation-ships with existing customers, as well as selling supplementary software and services.

As a result of these developments and the state of the economy, the enterprise appli-cations market remained weak in 2003, while competition for new customers grew moreintense. From a historical perspective, volume trends were still very weak during the year.According to leading sector analysts, growth was negative, particularly in Europe.Meanwhile, customers continued to be cautious about signing agreements to implementnew enterprise applications.

The overall result was continued great difficulty in determining how and when partic-ular transactions would be signed, thereby creating uncertainty about when license rev-enue would accrue.Thus, there were large fluctuations among the various quarters of theyear. However, the United States and parts of Asia showed signs of a hesitant but incipi-ent rise in demand for enterprise applications during the latter part of the year.

The consolidation of the market, primarily PeopleSoft’s acquisition of J.D. Edwards andOracle’s hostile bid for PeopleSoft, accelerated during the year. Speculation about theseand other restructuring deals reinforced customer caution about investing in enterpriseapplications.

Intentia retains its long-term optimism about the enterprise applications market, giventhat a large number of the companies in its target group are still in great need of modify-ing their business processes and making them more efficient. Furthermore, relatively fewof these companies currently have enterprise applications. Intentia has continuallystrengthened its competitiveness and market position over the years by purposefully con-structing a global organization of skilled, knowledgeable employees while—based onleading-edge technology—developing the most complete range of product offering avail-able.

Lower Consulting Revenue Had a Considerable Negative Impact on Net Revenue During the Year

The purchasing behavior of Intentia’s customers was marked by unpredictability duringthe year. The volume of ongoing procurement projects was stable, while many orderswere negatively affected by postponed purchasing decisions. In addition, the contractualvalue of individual orders declined as customers increasingly split them up such that theinitial order was less than had previously been the case. Intentia’s financial position alsohad a negative impact on business activity by virtue of the uncertainty it caused amongsome customers.

The weaker market considerably affected consulting operations as well. That wasreflected in a lower volume of implementation projects in the wake of poorer newlicense sales, along with postponements of upgrade projects by existing customers, theeffect of which was particularly noticeable in the second half of the year.

The year’s net revenue was down by 20 percent to SEK 2,928 million (3,649).Exchange-rate effects reduced net revenue by 3 percentage points.

2003 Annual Report forIntentia International AB (publ).Corporate identity no. 556387-8148Registered office: Danderyd, SwedenDirectors’ Report


23

Net Revenue by Quarter

Percentage of full year2003 2002 % Change 2003 2002

Q1 760 903 –16 26 25

Q2 771 991 –22 26 27

Q3 601 758 –21 21 21

Q4 796 997 –20 27 27

Full year 2,928 3,649 –20 100 100

License Orders Received Surpassed License Revenue for the Year

Despite the weaker market, Intentia pursued 280 sales projects during the year.Thanksto improvement late in the year, license orders received exceeded license revenue by SEK21 million.Total orders received were down by 8 percent to SEK 904 million (980) forthe full year.The Company obtained 127 new customers. License revenue declined by 16percent to SEK 883 million (1,057). New customers accounted for 28 percent of alllicense revenue, while existing customers accounted for 72 percent. Upgrades generated46 percent of license revenue during the year.The backlog of license orders increased by4 percent to SEK 541 million (519) at the end of the year.

License Orders Received and Backlog of Orders by Quarter (SEK million)

Orders received Order backlog2003 2002 2003 2002

Q1 263 148 575 534

Q2 194 347 563 574

Q3 100 141 481 492

Q4 348 343 541 519

Full year 904 980

License revenue accounted for 30 percent (29) of net revenue. License revenueimproved somewhat in the second half of the year to 53 percent (51) of the annualfigure. Both Central Europe and the Americas did better in the second half of the yearthan the corresponding period of 2002. Most of the other regions posted an improve-ment in license revenue in the second half of 2003 compared to the first half of the year.

License Revenue by Quarter (SEK million)

2003 % Change 2002 % Change

Q1 207 –2 211 –11

Q2 206 –33 307 12

Q3 182 –19 223 –9

Q4 288 –9 316 –29

Full year 883 –16 1,057 –12

Two Hundred of the Year’s Implementation Projects Were Java-Based

Intentia carried on some 500 major implementation projects during the year, 200 ofwhich were Java-based. The year’s consulting revenue declined by 21 percent to SEK2,006 million (2,539). New customers accounted for 13 percent of consulting revenueand existing customers for 87 percent. Support services generated 7 percent (5) of allconsulting revenue. Consulting rates declined by about 7 percent during the year, reduc-ing consulting revenue by approximately SEK 150 million. Consulting revenue represented69 percent (70) of net revenue for the year.


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Consulting Revenue by Quarter (SEK million)

2003 % Change 2002 % Change

Q1 545 –19 673 8

Q2 562 –15 665 –3

Q3 403 –23 524 –14

Q4 496 –27 677 –19

Full year 2,006 –21 2,539 –8

Consulting revenue in Asia and Australia/New Zealand rose during the year.The improve-ment reflected expansion in the region, the steadily broadening customer base boostingdemand for implementation services. Consulting revenue in the other regions was downfrom 2002.The total decrease was 17 percent for the first half of the year and 25 per-cent for the second half.

Lower Contribution from Consulting Revenue Reduced Gross Earnings by SEK 227 Million

Gross earnings declined by SEK 387 million to SEK 1,047 million (1,434).The gross margindecreased by 3 percentage points to 36 percent (39). Lower license revenue accountedfor SEK 153 million, and lower consulting revenue for SEK 227 million, of the decline ingross earnings.

The consulting margin was down from 17 percent in 2002 to 11 percent in 2003.A number of developments unfavorably affected the consulting margin during the year.The combination of lower volumes and ongoing price pressure had a significant negativeimpact on revenue and thereby on productivity as well. However, staff reductions thathave been carried out and those that are under way in early 2004 will ensure greater bal-ance between consulting revenue and costs in 2004. Skills development efforts related tothe technology shift lowered productivity and thereby the consulting margin.The nega-tive impact on the margin occasioned by the skills development efforts is expected togradually fade now.

Contribution from Consulting Revenue (SEK million) and Consulting Margin, by Quarter

2003 2002Contribution Margin % Contribution Margin %

Q1 67 12 124 18

Q2 88 16 106 16

Q3 11 3 81 16

Q4 49 10 129 19

Full year 214 11 441 17

Severance-related expenses affected the contribution from the consulting operation dur-ing the year. The expenses had a negative impact of SEK 45 million, reducing the year’sconsulting margin by 2 percentage points. Excluding severance-related expenses, the con-sulting margin for the year was 13 percent.

Excluding Nonrecurring Items, Costs Decreased by 18 Percent During the Year

In 2001, Intentia began adapting its organization and processes to allow for the kind ofefficiency that would enable expansion at a lower marginal cost once the market startsto grow again.That effort was largely completed in 2002 and 2003. In addition to the costreductions carried out in line with these changes, the Company adjusted its resources toweaker demand.


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Intentia considerably altered its organization and processes, including a more integratedstructure to improve economies of scale in the face of the Company’s broad geographicrange. Uniform internal procedures in a variety of areas enabled global coordination of anumber of functions, as a result of which cost effectiveness improved.

Intentia anticipated in 2002 that the enterprise applications market would remainweak and difficult to predict in 2003.Thus, the Company accorded top priority to its tar-get of reducing costs by at least SEK 150 million during the year.

As 2003 progressed and market conditions turned out to be considerably poorer thanexpected, Intentia stepped up its cost effectiveness efforts. As a result, consulting costsand indirect expenses decreased by SEK 567 million.

Consulting Costs and Indirect Expenses by Quarter (SEK million)

2003 2002 % Change

Q1 828 923 –10

Q2 795 972 –18

Q3 669 801 –16

Q4 814 977 –17

Full year 3,106 3,673 –15

Throughout the year, measures to reduce costs were adapted to developments in themarket and at the Company.The total number of employees decreased by 320 to 2,999(3,319) at the end of the year. Completed cost effectiveness efforts had a somewhat neg-ative impact on productivity.

Consulting costs and indirect expenses decreased by 15 percent to SEK 3,106 millionfor the year. Nonrecurring items, consisting of SEK 65 million (17) in severance-relatedexpenses, SEK 19 million (0) in write-downs of goodwill and SEK 12 million (6) in write-downs of capitalized product development, reduced consulting costs and indirect expensesin 2003. Adjusted for these items, costs decreased by SEK 640 million, or 18 percent.

The staff reductions were made without sacrificing Intentia’s ability to serve new andexisting customers or to maintain and expand its product offering. However, the numberof employees increased in Asia during the year to handle growing demand.The numberof employees in the Group as a whole averaged 3,103, as opposed to 3,370 in 2002.

In addition to staff reductions, costs decreased during the year as a result of a newcompensation plan that linked salary expenses more closely to Group, rather thanregional and local, progress. Furthermore, expenses unrelated to salaries declined byvirtue of general restraint and expedients such as the renegotiation of external agree-ments, thereby economizing on purchased services. Salary expenses were down by SEK345 million to SEK 2,007 million (2,352). Based on the average number of employees,approximately SEK 160 million of the decrease was attributable to lower fixed and vari-able salary expenses, while around SEK 190 million stemmed from a reduction in thenumber of employees. Staff reductions carried out in 2003 generate savings of SEK 240million on a full-year basis.The cost reductions generated by these measures exceededSEK 90 million in 2003 and will total an additional SEK 150 million in 2004. Combinedwith the actions being taken early in 2004, this will ensure a continuation of substantialcost reductions. In addition to the impact of the cost effectiveness measures adopted dur-ing the year, personnel expenses declined as a result of staff reductions in the latter partof 2002.Those reductions lowered 2003 costs by more than SEK 50 million.

The impact of actions taken during the year was increasingly able to offset poorerrevenue.


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Percentage of Quarterly Revenue Decline Offset by Lower Costs (SEK million)

Reduction Reduction Costsrevenue costs 1) %

Q1 143 124 87

Q2 219 187 85

Q3 158 139 88

Q4 201 190 95

Full year 721 640 89 1) Excluding nonrecurring items

Consulting costs were SEK 1,792 million (2,099), while sales and marketing expensesamounted to SEK 754 million (913). Write-downs of goodwill totaling SEK 19 millionincreased sales expenses. Product development expenses were SEK 283 million (388).While SEK 177 million (154) in product development expenditures was capitalized dur-ing the year, SEK 71 million (39) in product development previously capitalized was amor-tized. Furthermore, previously capitalized product development was written down by anet amount of SEK 12 million.The year’s administrative expenses came to SEK 277 mil-lion (273).

Lower Costs Largely Offset the Impact of Poorer Revenue on Earnings

The year’s operating earnings declined by SEK 131 million to SEK –238 million.

Change in Operating Earnings

Change from 2002 to 2003SEK million Percent

Operating earnings, 2002 –107 –16

License revenue –174 –21

Consulting revenue –534 –20Subtotal, license and consulting revenue –708 –17

Running consulting costs and indirect expenses 640 –17

Nonrecurring expenses –73

Other costs/revenue, net 10Change in operating earnings –131

Operating earnings, 2003 –238

As cost adaptations took effect during the year, earnings steadily improved in relation to2002.As a result, operating earnings before write-downs and severance-related expenses,having declined in the first two quarters, were unchanged in the third quarter and high-er in the fourth quarter than the corresponding periods of 2002.

Quarterly Operating Earnings and Nonrecurring Expenses in 2002 and 2003

2003 Before 2002 Beforeoperating nonrecurring operating nonrecurring earnings items earnings items Change

Q1 –88 –54 –33 –30 –24

Q2 –40 –29 6 6 –35

Q3 –82 –74 –77 –74 –

Q4 –28 16 –3 14 2

Full year –238 –141 –107 –84 –57


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The Southern Europe and Northwestern Europe regions posted operating profits, albeitlower than in 2002. The Americas reported a smaller operating loss, while the otherregions were weaker than in 2002 and operated at a loss.

The year’s operating earnings before depreciation and amortization amounted to SEK–47 million (83). Depreciation and amortization was unchanged at SEK 190 million (190).Greater amortization of capitalized product development was offset by less depreciationof tangible assets in the wake of lower investments over the past few years. Moreover,goodwill amortization decreased, given that a number of acquisitions carried out in theearly 1990s had been fully written off. Amortization of capitalized product developmenttotaled SEK 71 million (39), whereas depreciation of tangible assets was SEK 59 million(83). Amortization of goodwill amounted to SEK 60 million (69).

Operating earnings before depreciation, amortization and write-downs came to SEK–16 million (83) for the year.

Nonrecurring Expenses Affected Financial Items and Tax for the Year

The year’s financial items amounted to SEK 50 million (–42).The repurchase during thethird quarter of 86 percent of outstanding convertible notes at 65 percent of their nom-inal value generated a financial gain of SEK 154 million.

Financial items were further affected by the write-down of SEK 68 million in financialreceivables and shareholdings in previous distributors. Neither the financial gain nor thewrite-downs had any impact on liquidity.

Earnings after financial items were SEK –191 million (–151) for the year.Since the Group’s earning power still varies from country to country, its tax burden is

uneven.The year’s tax expense was SEK 228 million (–6). Excluding financial gains, depre-ciation, amortization and write-downs, tax on the year’s current earnings totaled SEK 45million.The gain from the repurchase of convertible notes gave rise to a tax burden ofSEK 43 million. Furthermore, deferred tax assets were written down by a total of SEK135 million, of which SEK 122 million was attributable to loss carryforward.At the end ofthe year, deficit deductions carried over amounted to SEK 230 million. Furthermore, thetax portion of non-capitalized loss carryforwards came to SEK 462 million. Non-capital-ized loss carryforwards are those deemed not to meet the accounting requirements forcapitalization.

The year’s earnings after tax were SEK –411 million (–144).

Margins and Interest Coverage Ratio

2003 2002 2001 2000 1999

Operating margin –8% –3% 2% –9% –10%

Net margin –14% –4% –1% –11% –11%

Interest coverage ratio –1.2 –0.1 0.8 1.8 –4.4

Trends by Region

Northern Europe

2003 2002 Change

License revenue 308 350 –42

Consulting revenue 987 1,192 –205

Net revenue 1,313 1,555 –242

Operating earnings –24 27 –51

No. employees at end of the year 1,098 1,219 –121


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Intentia holds a strong position in the Nordic market and is a leader in many of the seg-ments in which it operates. Competition with both regional and international rivals isheavy.The considerably weaker Norwegian economy substantially affected the purchas-ing behavior of Intentia’s customers. Intentia focused on all of the segments in which itoperated in the region.The Company signed agreements with some 40 new NorthernEuropean customers during the year, including Albany Door Systems, Brandtex, Ilva,Ingman Group, Junkers, KWH Pipe, Lassila & Tikanoja, MIO, Ostnor and Sunkost. Theregion’s license orders received declined during the year. License revenue was down by12 percent to SEK 308 million (350), while consulting revenue fell by 17 percent to SEK987 million (1,192). Operating earnings were SEK –24 million (27). Employees numbered1,098 (1,219) at the end of 2003, a decrease of 121 from the same time the year before.

Central Europe

SEK million 2003 2002 Change


Consulting revenue 284 339 –55

Net revenue 403 468 –65

Operating earnings –36 –21 –15

No. employees at end of the year 341 392 –51

A combination of the weak German business cycle and uncertainty about future eco-nomic trends led to a poorer business climate in the region. Price competiton remainedfierce. Intentia’s market position improved somewhat during the year, one reason beingthat the number of suppliers decreased. Despite the weaker market, Intentia’s sales tonew customers were 35 percent higher than in 2002. The main segments that theCompany focused on in 2003 were the food and beverage industry, distribution-inten-sive industries and service and maintenance related businesses. New customers in theregion included Alpha Management, Haribo, Kotanyi, Kyocera, Michelin and RudolfHolzmann. License orders received were up. License revenue fell by 5 percent to SEK 115million (121), while consulting revenue declined by 16 percent to SEK 284 million (339).Operating earnings amounted to SEK –36 million (–21). Employees numbered 341 at theend of 2003, as opposed to 392 at the same time the year before.

Northwestern Europe





Operating earnings 10 44 –34


The regional market remained cautious in 2003.The downturn in the Netherlands econ-omy, along with protracted decision-making processes on the part of British customers,had a substantial negative impact on revenue during the year. Competition for medium-sized customers remained fierce. The presence of all major suppliers in the marketincreased price pressure and extended procurement cycles. Intentia’s share of the seg-ments in which it operates grew during the year.The combination of successful market-ing initiatives and ongoing cost effectiveness measures laid a firm foundation for futureoperations. The main segments that the region focused on in 2003 were the fashionindustry, the food and beverage industry, distribution-intensive industries and service and


29

maintenance related businesses. Among the region’s new customers were Anglo BeefProducts, BFNL, Bison, Brunner Mond, Cherry Valley, De Zuivelhoeve, Ice Fashion,Impextraco, Rensa, Scott Bader, Shamrock Foods, Silvo, St. Regis and Umbro. Licenseorders received were lower than 2002. License revenue was SEK 120 million (135).Theyear’s consulting revenue declined to SEK 242 million (388). Operating earnings amountedto SEK 10 million (44).Total employees numbered 232 (290) at year-end.

Southern Europe





Operating earnings 41 77 –36


In a slow market, Intentia maintained its strong position in the region. France, whereIntentia is a leading supplier to medium-sized companies, is the region’s principal market.The main segments that the Company focused on in 2003 were the food and beverageindustry, the manufacturing sector and service-related businesses. New customers inSouthern Europe included Armand Basi, Cilas, Cristal Union, Freixenet and Michelin.License orders received were lower than in 2002 and license revenue totaled SEK 190million (244). Consulting revenue was SEK 372 million, as opposed to SEK 474 million for2002. The year’s operating earnings came to SEK 41 million (77). The region employed393 people at the end of 2003, as opposed to 460 at the same time the year before.

Americas


License revenue 63 61 2



Operating earnings –53 –95 42


License sales were affected by a persistently weak market, although there were signs ofimprovement in the latter part of the year. Excess capacity in the market had a negativeimpact on price trends in 2003. Measures adopted in 2002 and 2003 made for a morebalanced cost structure in the Americas.The main segments that the region focused onin 2003 were the fashion industry, the food and beverage industry, the manufacturing sec-tor and service and maintenance related businesses. Among Intentia’s new customers inthe region were Acushnet, Cummins, Hutchinson Technology, La Brea, Red Wing ShoeCompany and The Hockey Company. License orders received rose during the year.Although increasing by 28 percent in USD terms, license revenue was negatively affectedby exchange-rate effects upon consolidation and totaled SEK 63 million (61). Consultingrevenue was SEK 99 million (162).The year’s operating loss improved further to SEK –53million (–95).The region employed 97 people (127) on December 31.


30

Asia and Australia/New Zealand



Consulting revenue 252 226 26


Operating earnings –27 –24 –3

No. employees at end of the year 353 289 64

Despite the outbreak of the SARS virus in Asia, Intentia’s position in the regional marketstrengthened further. During the first part of the year, SARS had a major negative impacton business activity in Asia. As a result, a number of customers postponed their purchas-ing decisions. Market consolidation, along with the elimination of a series of suppliers, bol-stered Intentia’s position. Demand picked up considerably in Australia/New Zealand.Thetotal number of procurement projects with medium-sized customers increased by almost100 percent during the year.The main segments that Intentia focused on in 2003 werethe fashion industry, the food and beverage industry, the manufacturing sector and service-related businesses.Among new customers in the region were Ace Style Intimate Apparel,FFM Malaysia, Getz Bros. & Co., Independent Fisheries, MSP Group, Omegatrend,Shanghai Mizuno,The Dairy Farm Company,Tsukishima Foods Industry, Unibic Australia,Unidux Electronics, Vita New Zealand, Weyerhaeuser Australia and Yokosuka Sangyo.License orders received were below 2002. License revenue totaled SEK 84 million (150).Consulting revenue rose by an additional 12 percent to SEK 252 million (226). Operatingearnings came to SEK –27 million, as opposed to SEK –24 million in 2002. Due partiallyto Intentia’s having taken over projects and human resources from a previous partner, thetotal number of employees at year-end was 353 (289).

Cash Flow after Investing Activities Improved Considerably

Cash flow, along with laying the foundation for profitable, sustainable growth, is a chief pri-ority that all of Intentia’s measures reflect. Despite lower earnings, the Company’s greaterfocus on capital efficiency, particularly when it came to accounts receivable, lead to a cashflow improvement from 2002 to 2003.After the change in working capital, cash flow fromoperating activities increased by SEK 77 million to SEK 163 million (86). Due to lowerinvestments, cash flow after investing activities improved by SEK 169 million to SEK –11million (–180).

The strong ongoing focus on working capital tied-up led to a positive change of SEK201 million (5) in working capital, while cash flow from operating activities was SEK –38million (81). Investments consisted overwhelmingly of capitalized product developmentthat totaled SEK 177 million (154). Other investments were limited, reflecting Intentia’spriority of ensuring that cash flow would not affect its liquidity in the face of weak earnings.

Working capital tied-up, with operating liabilities exceeding operating receivables, wasSEK –177 million (4). Accounts receivable improved further by SEK 247 million to SEK870 million (1,117) at the end of the year.


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Working Capital

Four-quarter averageworking capital as % of

Quarterly breakdown (SEK million) rolling 12-month revenue2003 2002 2003 2002

Q1 –174 102 –2 3

Q2 –125 –17 –3 2

Q3 –138 –50 –4 –

Q4 –177 4 –5 –

Accounts Receivable

% of rollingQuarterly breakdown (SEK million) 12-month revenue

2003 2002 2003 2002

Q1 801 1,106 23 27

Q2 813 847 25 21

Q3 641 722 20 18

Q4 870 1,117 30 31

Quarterly average 781 948

Monthly average 758 895

Due to Intentia’s volatile cash flows, which reflect seasonal variations, particularly in termsof license revenue, its financial position fluctuates throughout the year. As a result, thereis a shift in net borrowings from one quarter to the next. Cash and bank balancesexceeded borrowings at the end of every quarter in 2003. Excluding convertible notesof SEK 71 million (552), cash and bank balances were SEK 58 million (27) higher thanborrowings at the end of the year. SEK 173 million (298) of borrowings was from banks,while SEK 63 million (78) consisted of financial leases related to fixed assets. Thedebit/equity ratio was –0.1 (0.0).

Net Borrowings

Q4 Q3 Q2 Q1

2003 58 16 37 117

2002 27 86 160 24

Positive net borrowings represent cash and bank balances exceeding borrowings, exclud-ing convertible notes.

Financial Ratios

2003 2002 2001 2000 1999

Share of riskbearing capital 41% 47% 46% 38% 58%

Equity/assets ratio 33% 23% 23% 5% 16%

Net indebtedness1) 58 27 216 –216 375

Debt/equity ratio1) –0.1 – –0.2 1.5 –0.8

Return on capital employed –15% –5% 8% –19% –16%

Return on stockholders’ equity –51% –19% –18% –258% –74%

1) Excluding convertible notes


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Product Development

Intenita has always accorded top priority to product development. The Company con-tinually enhances the functionality and scope of its products so as to furnish customerswith solutions that will help them create more efficient business models.

Since the mid-1990s, Intentia has concentrated on using next-generation technologyas a foundation for designing its software.The Company’s choice of Java, which has nowwon the recognition and respect of both customers and leading industry analysts, repre-sents a decided competitive advantage. Intentia’s consistent strategy has been to safe-guard the quality of its products and technology by means of efficiency in its developmentenvironment and development processes. In recent years, such qualities have been cru-cial in determining the degree to which especially existing customers entrust a supplierwith new projects.

Intentia initiated and implemented definitive measures in 2003 aimed at forging a new,integrated approach to choosing the manner and timing of new software releases. In thepast, new versions have come at 18–24 month intervals. Updates and modifications werereleased on a continual basis between the main versions. During the lifetime of a version,all such changes render the product increasingly more complex, which has sometimesresulted in uncertainty among customers as to what has and has not been updated.Intentia’s new strategy is to move away from version cycles and start releasing editionsas of 2004.

The Company will launch two editions of Movex annually, each of which will consistof clearly defined and documented applications and underlying structures.The advantagesfor the Company’s development organization will be greater clarity and efficiencythroughout the process, as products can be launched in stages based on individual appli-cations.

Ultimately, this approach will enable Intentia to offer more rapid delivery of all or partsof its new applications.The Company’s customers will enjoy improved safety and securityas well as greater ease in identifying the products that are supported in each particularedition.

In 2003, Intentia continued to concentrate on assuring the functionality and quality ofall projects that had implemented Java Version 12 of Movex.The initiative represented animportant step in developing stable expertise for the major effort required to usherexisting customers from the old RPG technology to new Java-based editions of Movex.That conversion effort will be Intentia’s top-priority area in 2004-2005.

The expansion of Intentia’s comprehensive strategic alliance with IBM in 2003 repre-sented a significant advance toward Intentia’s goal of being even more competitive. Aspart of the cooperative effort, Intentia will standardize and deliver its Java-based (J2EE)enterprise application on IBM’s open software and hardware, including Linux, OS/400,UNIX and NT. In addition, Intentia will work more closely with IBM to broaden joint sales,marketing and development activities.

Intentia launched a number of important products during the year, as well as deliver-ing applications based on IBM WebSphere. Among the key new products were MovexJava Rental, Movex Mobile Sales and Movex Output Management. Finally, the Companyrelaunched a series of existing products on IBM WebSphere, among the most importantof which were Movex e-Procurement and Movex e-Sales.


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Human Resources

The total number of employees was down by 320 to 2,999 at the end of the year.Adjusted for notices of termination, staff turnover remained low.A total of 366 employeesreceived notices of termination during the year, 57 of whom remained with the Companyon December 31 and will leave in 2004.

As the result of ongoing expansion in the Australia/New Zealand market, the numberof employees increased somewhat.The Singapore staff, for example, grew by 24 follow-ing the takeover of the business from a previous distributor.

Almost 50 percent of the employees who left Intentia during the year were consultants.The consulting staff decreased by 141, or 7 percent.

Streamlining of the sales and marketing organization led to a staff reduction of 97, or19 percent.

Centralization and coordination of the product development organization reduced itsstaff by 47, with adaptation of products to local requirements falling increasingly withinthe auspices of the development company.

Number of Employees at the End of Each Quarter

2003 Change 2002 Change

Q1 3,195 –124 3,392 67

Q2 3,095 –100 3,405 13

Q3 3,061 –34 3,379 –26

Q4 2,999 –62 3,319 –60

Change for the full year –320 –6

Number of Employees at the End of the Year

2003 2002 Change

Consulting organization 1,872 2,013 –141

Sales and marketing 413 510 –97

Product development 410 457 –47

Management positions and administration 304 339 –35

Total 2,999 3,319 –320

The premise of Intentia’s compensation model is to reward employees for performance.The principle is rooted in Intentia’s overarching philosophy of remuneration, the corner-stone of which is to reward good performance but not ignore poor performance. Thesalary model, which is uniform throughout the Group, is designed to meet these criteria.

In order to ensure that employees are recompensed in line with their performance,Intentia strives for a model characterized by a large proportion of variable salaries, highincome potential for performance that helps the Company reach its targets and theabsence of variable salaries for poor performance.

The salary model is transparent in that the Group-wide targets of license revenue,consulting revenue, consulting margin, operating earnings and cash flow are allocatedthroughout the organization to region, business unit and ultimately to the individual.Thesetargets are weighted on the basis of priority and apply to each member of the organiza-tion, including the CEO and management.

Throughout the organization, the calculation of variable salaries is based on individualtarget fulfillment.To attain the full potential of variable salaries, operating units as well asthe individuals under them must meet their targets. If the units do not meet their targets,variable salaries are reduced by a predetermined percentage.


34

Salaries and salary-related expenses totaled SEK 2,007 million (2,352). Personnel expensesper employee fell by 7 percent during the year to SEK 647 thousand (698), while value-added per employee declined from SEK 723 thousand in 2002 to SEK 631 thousand in2003. Personnel expenses rose to 60 percent (59) of total costs.

Employee Ratios (SEK thousand)

2003 2002 Change

Net revenue per employee 944 1,083 –13%

Value-added per employee 631 723 –13%

Salary expenses per employee 647 698 –7%

Value-added ratio 0.98 1.04 –0.06

Parent Company

Net revenue was SEK 56 million (110) for the Parent Company, while earnings after finan-cial items were SEK –269 million (–97). Earnings after tax amounted to SEK –374 million(–72).The Parent Company’s investments were SEK 0 million (0). Liquidity at the end ofthe year was SEK 147 million (143), while external borrowings excluding convertiblenotes totaled SEK 0 million (0). Convertible notes came to SEK 71 million (552).

Shares in Group companies were written down by SEK 305 million in the ParentCompany. In addition, deferred tax assets were written down by SEK 85 million.

The Parent Company had 32 (77) employees at the end of the year, while the num-ber of employees averaged 34 (64) during the year.

Repurchase of Convertible Notes and Completed Issue of New Shares

During the second quarter, Intentia offered to repurchase convertible notes from theirholders at 65 percent of their nominal value plus 5 percent accrued interest. The offerwas conditional upon obtaining financing by issuing an equivalent number of shares.Theoffer was accepted by 86 percent of the holders, and the issue of new shares upon whichthe offer was conditioned was fully subscribed for during July, as a result of which 86 per-cent of the convertible notes were repurchased.The issue of new shares raised SEK 401million for Intentia after issue expenses. The repurchase of convertible notes and out-standing coupons totaled SEK 338 million, whereby the transaction positively impactedliquidity by SEK 63 million.

Proposed Special Issue of New Shares

The Board resolved in late December to carry out an issue of new shares directedtoward Symphony Technology Group and representing 26 percent of Intentia’s capital,subject to approval by an extraordinary general stockholders’ meeting.The issue of newshares would raise a total of SEK 256 million before issue expenses, and SymphonyTechnology Group would obtain options representing an additional 10 percent ofIntentia’s capital at a subscription price of SEK 10 each.The options would mature at fouryears.An extraordinary general stockholders’ meeting on February 6, 2004 approved theBoard’s resolution on the issue of new shares, as well as an instrument of debt consist-ing of detachable options.


35

Information on Financial Instruments and Risks

In its daily operations, the Group is exposed to exchange-rate, financing and interest-raterisks.These risks and how they are managed is described in note 22.

Activities of the Board of Directors

The Board of Directors had six members in 2003:Olof Ljunggren, Chairman, member of the board since 1996Jan Carlzon, member of the board since 1996Tommy H. Karlsson, member of the board since 2001Peter Lorange, member of the board since 1999Morgan Olsson, member of the board since 1992Björn Algkvist, President and CEO, member of the boardsince 1992.

The Board of Directors has adopted procedural rules for its own tasks, including instruc-tions for the distribution of work between the Board and the CEO, as well as instructionsregarding ongoing financial reporting.The procedural rules also include a meeting scheduleand specifies the matters that are to be taken up at each meeting. In addition to theinaugural meeting, the Board is to hold at least five ordinary meetings per calendar year.Furthermore, the CEO is to submit a report at these meetings on the Company’s busi-ness outlook, as well as its economic and financial position.The report is to be of such anature that the Board is able to make a well-founded assessment of the Company’s sta-tus. Among the matters to be taken up in accordance with the program are the adop-tion of final accounts, reviews of various matters and proposed decisions at theJanuary/February meeting in preparation for the annual general meeting, monitoring ofmajor investments and approval of a strategic plan at the August/September meeting, andreview and adoption of the following year’s preliminary budget at the December meeting.At the Board meeting that takes up Intentia’s annual accounts, the Company’s auditorsoffer observations based on their audit.

Six ordinary Board meetings were held in 2003. A number of extra Board meetingswere also held.The Board’s work during the year focused on measures aimed at adapt-ing the business to the current state of the market. Each ordinary Board meeting exam-ined, discussed and followed up on the Company’s cost effectiveness and capital efficiencyefforts. During the first half of the year, the Board discussed outstanding convertible notesand their implications for the Company.As a result, the Board resolved in May to offer torepurchase the notes from their holders.The repurchase was conditional upon financingby means of an issue of new shares. Several ordinary and special Board meetings took upthe restructuring of the sector. Following such discussions, the Board resolved inDecember to carry out an issue of new shares directed toward Symphony TechnologyGroup.

The Company’s auditors attended two of the Board meetings during the year. Theyreported on their review of the 2002 annual accounts at the February meeting. At aSeptember meeting, they discussed planning prior to the autumn review as well as ques-tions related to the upcoming annual accounts.

The Board had no subcommittees in 2003.


36

Compliance with IAS/IFRS

Intentia works continuously to comply with and implement the new recommendationsof the Swedish Financial Accounting Standards Council.The changes are part of a thor-oughgoing revision of Swedish accounting standards to comply with InternationalAccounting Standards (IAS/IFRS).

Intentia carried out a project in 2003 to ensure compliance with IAS/IFRS in 2005.Theproject entailed an overall consequence analysis and an assessment of the work requiredto guarantee a proper transition to IAS/IFRS. The analysis formed the basis for theCompany’s ongoing effort throughout the year.

The most significant differences between current accounting principles and theIAS/IFRS standards to be adopted in 2005 involve goodwill and financial instruments.

Outlook for 2004

There are signs that the market is improving and stabilizing. However, great uncertaintyremains about short-term trends. Measures, both completed and planned, will continueto improve Intentia’s cost structure. Thus, the prospects of an operating profit in anunchanged market are deemed to be good. Once the market enters a new growthphase, the lower costs will substantially boost Intentia’s earnings.

Appropriation of Earnings

The Board of Directors and Chief Executive Officer propose that the Parent Company’sSEK –421,369 thousand accumulated deficit be disposed of as follows:

Carried forward to the 2004 accounts SEK 421,369 thousand

According to the consolidated balance sheet, the Group’s total loss as of December 31,2003 was SEK –1,287 million.The Board proposes that no transfers be made to restrictedreserves.


37

300

330030

060

09

0

120

150

180

210

240

270

290

260

250

240

230

220

210200

180170160

150

140

130

130

110100

09

0080

070

060

050

040

030

020010 350

340

330

320

310

300

0

190

280

270

38


Income Statement Group

2003 accounts at 2002

exchangeAmounts in SEK million Note 2003 2002 rates

License revenue 882.6 1,056.7 913.4

Consulting revenue 2,005.9 2,539.3 2,070.6

Other revenue 39.6 52.9 41.3

Net revenue 2 2,928.1 3,648.9 3,025.3

Consulting cost –1,791.9 –2,098.7 –1,857.0

Cost for license –62.8 –84.3 –74.4

Cost for other revenues –26.7 –31.5 –28.7

Gross earnings 1,046.7 1,434.4 1,065.2

Other operating revenues 213.8 242.8 217.1

Other operating expenses –184.3 –210.1 –187.0

Total other operating items 29.5 32.7 30.1

Product development expenses –282.7 –388.3 –282.7

Sales and marketing expenses –754.1 –912.6 –781.2

Administration expenses –277.0 –273.2 –286.1

Operating earnings 2,3,4,5 –237.6 –107.0 –254.7

Financial items

Financial income 6 135.7 90.6 136.4

Financial expenses 7 –85.5 –132.1 –89.1

Earnings from participations in associated companies 13 –3.4 –2.2 –3.6

Earnings after financial items –190.8 –150.7 –211.0

Earnings before tax –190.8 –150.7 –211.0

Tax on profit/loss for the year 8,18 –228.3 6.2 –229.6

Minority interest in years’ earnings 8.0 1.0 8.0

Profit/loss for the year –411.1 –143.5 –432.6

Earnings per share (SEK) 9

Basic, average for period –6.0 –3.9 –

Diluted, average for period –6.0 –3.9 –

Since earnings per share improve as a result of adjustment for conversion of convertible notes and

options, dilution effects are not included when calculating earnings per share.

Number of outstanding shares (thousand)

Basic, at end of period 109,720 36,573 –

Basic, average for period 69,017 36,490 –

Diluted, average for period 71,559 40,514 –

No dividends are proposed for 2003.

39


Balance Sheet Group

Amounts in SEK million Note 12-31-03 12-31-02ASSETS

Fixed assets

Intangible assets

Capitalized product development expenditure 10 342.9 249.6

Goodwill 10 262.2 348.7

605.1 598.3

Tangible assets

Buildings and land 11 9.3 10.8

Capitalized leasehold improvements 11 36.8 44.5

Equipment 11 118.3 167.2

164.4 222.5

Financial assets

Participation in associated companies 13 3.0 6.7

Other long-term holdings of securities 16 3.8 4.3

Other long-term receivables 17 18.0 74.7

Deferred tax assets 18 273.6 473.3

298.4 559.0

Total fixed assets 1,067.9 1,379.8

Current assets

Inventories, etc.

Goods for resale 0.7 0.6

Work in progress 5.2 10.0

Advances to suppliers 1.7 2.5

7.6 13.1

Current receivables

Accounts receivable 869.2 1,115.4

Receivable from associated companies 0.9 1.3

Other receivables 108.0 146.7

Prepaid expenses and accrued income 19 169.9 355.6

1,148.0 1,619.0

Short-term investments 27 61.2 211.7

Cash and bank balances 27 232.9 191.1

Total current assets 1,449.7 2,034.9

TOTAL ASSETS 2,517.6 3,414.7

40


Balance Sheet Group

Amounts in SEK million Note 12-31-03 12-31-02STOCKHOLDERS’ EQUITY AND LIABILITIES

Stockholders’ equity

Restricted stockholders’ equity

Capital stock (109,719,600 shares at SEK 10 per share) 1,097.2 365.7

Restricted reserves 1,021.6 1,373.9

2,118.8 1,739.6

Non-restricted stockholders’ equity

Losses brought forward –876.1 –816.7

Profit/loss for the year –411.1 –143.5

Total stockholders’ equity 831.6 779.4

Minority interests 9.8 20.1

Provisions

Provisions for deferred tax 18 6.1 49.6

Other provisions 20 30.4 –

Total provisions 36.5 49.6

Long-term liabilities

Convertible notes 21 71.1 551.6

Liabilities to credit institutions 21,22 46.3 64.0

Other liabilities – 9.8

Total long-term liabilities 117.4 625.4

Current liabilities

Liabilities to credit institutions 21,22 189.7 310.2

Overdraft facilities 23 – 1.8

Advances from customers 201.2 172.6

Accounts payable 165.1 164.9

Tax liabilities 19.6 30.8

Other non-interest-bearing liabilities 139.0 243.9

Accrued expenses and prepaid income 24 807.7 1,016.0

Total current liabilities 1,522.3 1,940.2

TOTAL STOCKHOLDERS’ EQUITY AND LIABILITIES 2,517.6 3,414.7

Assets pledged 25 865,2 727,5

Contingent liabilities 25 118.3 149.9

41


Changes in Stockholders’ Equity Group

Non-restricted

Restricted stockholders’Amounts in SEK million Capital stock reserves equity Total

Opening balance January 1, 2002

according to adopted

balance sheet for previous year 360.7 1,437.3 –947.7 850.3

Translation differences* – –8.1 36.4 28.3

Total change in stockholders’ equity that

is not reported in the income statement – –8.1 36.4 28.3

Transfer between

non-restricted and restricted equity – –94.6 94.6 –

Profit/loss for the year – – –143.5 –143.5

New stock issued 5.0 39.3 – 44.3

Stockholders’ equity on December 31, 2002 365.7 1,373.9 –960.2 779.4

Translation differences* – –31.5 90.3 58.8

Other – – 3.0 3.0

Total change in stockholders’ equity

that is not reported in the income statement – –31.5 93.3 61.8

Transfer between

non-restricted and restricted capital – 9.1 –9.1 –


New stock issued 731.5 –330.0 – 401.5

Stockholders’ equity on December 31, 2003 1,097.2 1,021.5 –1,287.1 831.6

* Financial reports of foreign operations are translated according to the “Current method.”

Accumulated translation differences amounted to SEK 18.3 million (–40.4) at year-end.

42


Cash Flow Group

Amounts in SEK million Note 2003 2002

Operating activities

Operating earnings –237.6 –107.0

Interest received 20.6 29.5

Interest paid –54.9 –59.0

Dividends received 0.3 0.2

Adjustment for items not affecting cash flow 26 281.9 319.8

Tax paid –48.1 –102.7

Cash flow from operating activities

before change in working capital –37.8 80.8

Inventories, etc. –0.1 0.1

Current receivables 436.0 264.6

Current liabilities –235.2 –259.8

Cash flow from operating activities 162.9 85.7

Investing activities

Acquisition of subsidiaries 12 –1.0 –65.3

Acquisition of intangible fixed assets 10 –172.2 –154.2

Acquisition of tangible fixed assets 11 –0.6 –45.7

Cash flow from investing activities –173.8 –265.2

Cash flow after investing activities –10.9 –179.5

Financing activities

New stock issued 401.5 44.3

Funds borrowed 822.6 687.4

Amortization of loans –1,320.4 –790.3

Cash flow from financing activities –96.3 –58.6

Cash flow for the year –107.2 –238.1

Liquid funds, opening balance 402.8 644.4

Translation difference in liquid funds –1.5 –3.5

Liquid funds, closing balance 27 294.1 402.8

43


Income Statement Parent Company


License revenue 42.6 74.9

Consulting revenue 0.8 11.5

Other revenue 12.1 23.6

Net revenue 55.5 110.0

Consulting cost –39.2 –98.7

Cost for other revenues –42.3 –13.0

Gross earnings –26.0 –1.7

Product development expenses –3.6 –

Sales and marketing expenses –13.6 –21.1

Administration expenses –62.3 –58.2

Operating earnings 2,3,4,5 –105.5 –81.0

Financial items

Financial income 6 233.4 60.5

Financial expenses 7 –397.3 –76.6

Earnings before tax –269.4 –97.1

Tax on profit/loss for the year 8 –104.2 25.3


44


Balance Sheet Parent Company

Amounts in SEK million Note 12-31-03 12-31-02ASSETS

Fixed assets

Tangible assets

Capitalized leasehold improvements 11 15.6 18.8

Equipment 11 0.6 1.1

16.2 19.9

Financial assets

Participation in Group companies 12 1,202.2 1,461.6

Receivable from Group companies 14 – 2.2

Participation in associated companies 13 0.6 0.6

Deferred tax assets 18 140.9 236.0

1,343.7 1,700.4

Total fixed assets 1,359.9 1,720.3

Current assets

Current receivables

Accounts receivable 1.2 41.5

Receivable from Group companies 392.1 262.9

Receivable from associated companies 0.6 0.9

Prepaid taxes 4.4 0.9

Other receivables 23.7 24.8

Prepaid expenses and accrued income 19 25.3 25.9

447.3 356.9

Cash and bank balances 147.0 143.1

Total current assets 594.3 500.0

TOTAL ASSETS 1,954.2 2,220.3

45


Balance Sheet Parent Company

Amounts in SEK million Note 12-31-03 12-31-02STOCKHOLDERS’ EQUITY AND LIABILITIES

Stockholders’ equity

Restricted stockholders’ equity

Capital stock (109,719,600 shares at SEK 10 per share) 1,097.2 365.7

Additional paid-in capital 607.3 958.3

1,704.5 1,324.0

Non-restricted stockholders’ equity

Losses brought forward –47.8 –


Total stockholders’ equity 1,283.1 1,252.2

Long-term liabilities

Convertible notes 21 71.1 551.6

Total long-term liabilities 71.1 551.6

Current liabilities

Accounts payable 33.4 13.4

Payable to Group companies 511.0 328.1

Other non-interest-bearing liabilities 1.9 2.6

Accrued expenses and prepaid income 24 53.7 72.4

Total current liabilities 600.0 416.5

TOTAL STOCKHOLDERS’ EQUITY AND LIABILITIES 1,954.2 2,220.3

Assets pledged 25 1,203.6 1,461.6

Contingent liabilities 25 193.2 236.5

46


Change in Stockholders’ Equity Parent Company

Non-restricted

Restricted stockholders’Amounts in SEK million Capital stock reserves equity Total

Opening balance January 1, 2002

according to adopted

balance sheet for previous year 360.7 931.9 –12.9 1,279.7

Transfer between non-restricted

and restricted equity – –12.9 12.9 –

New stock issued 5.0 39.3 – 44.3


Stockholders’ equity on December 31, 2002 365.7 958.3 –71.8 1,252.2

Other – – 3.0 3.0

Transfer between non-restricted

and restricted equity – –21.0 21.0 –


New stock issued 731.5 –330.0 – 401.5

Stockholders’ equity on December 31, 2003 1,097.2 607.3 –421.4 1,283.1

Intentia International has not paid any dividends to date.The Board of Directors expects the Company’s

dividend policy to remain restrictive in the next few years.

Number of shares at a par value of SEK 10 per share 2003 2002

Beginning of year 36,573,200 36,073,200

New stock issued 73,146,400 500,000

End of year 109,719,600 36,573,200

47


Cash Flow Parent Company


Operating activities

Operating earnings –105.5 –81.0

Interest received 59.2 56.1

Interest paid –79.3 –70.5

Adjustment for items not affecting cash flow 26 5.2 16.7

Tax paid –12.7 –0.6

Cash flow from operating activities

before change in working capital –133.1 –79.3

Current receivables –395.5 401.1

Current liabilities 459.5 –344.9

Cash flow from operating activities –69.1 –23.1

Investing activities

Acquisition of tangible fixed assets –0.2 –0.2

Cash flow from investing activities –0.2 –0.2

Cash flow after investing activities –69.3 –23.3

Financing activities

New stock issued 401.5 44.3

Funds repaid –328.3 –375.6

Cash flow from financing activities 73.2 –331.3

Cash flow for the year 3.9 –354.6

Liquid funds, opening balance 143.1 497.7

Liquid funds, closing balance 27 147.0 143.1

48


Notes and AccountingPrinciples

NOTE 1

Accounting PrinciplesThis annual report has been prepared in accordance with the SwedishAnnual Accounts Act, as well as recommendations of the Swedish FinancialAccounting Standards Council (“Council” below) and opinions of its TaskForce. As of January 1, 2003, the following new and revised recommenda-tions are being employed for the first time: inventory valuation (RR 2:02),presentation of financial statements (RR 22), segment reporting (RR 25),events after the balance sheet date (RR 26), financial instruments, recognitionand measurement (RR 27) and government subsidies (RR 28).The applica-tion of these recommendations has not had any significant impact onIntentia’s earnings or position.These new and revised recommendations haveled to no accounting policy changes and thereby no recalculation of com-parison figures. Otherwise, the same accounting policies are in effect as forthe 2002 annual report.

ClassificationFixed assets, long-term liabilities and provisions consist essentially of itemsthat are expected to be recovered or paid more than 12 months after thebalance sheet date. Current assets and short-term liabilities consist essentiallyof items that are expected to be recovered or paid within 12 months of thebalance sheet date.

Consolidated Financial StatementsThe consolidated financial statements comprise the companies in which theParent Company directly or indirectly controls shares representing morethan 50 percent of the votes or otherwise has a controlling interest.The con-solidated financial statements were prepared in accordance with Council rec-ommendation RR 1:00 on consolidated financial statements, using the acqui-sition method.

Subsidiaries

In accordance with the acquisition method, subsidiaries’ equity and the equitycomponent of untaxed reserves at the time of acquisition are completelyeliminated from the consolidated financial statements. For an acquired com-pany, the proportion of its earnings from the time of acquisition is includedin the Group’s consolidated earnings. Stockholders’ equity in an acquiredcompany is determined by means of an acquisition analysis based on themarket value of its assets and liabilities at the time of acquisition.The differ-ence between the acquisition value and the value of stockholders’ equityarrived at by the acquisition analysis is reported as goodwill, which is amor-tized on a straight-line basis over 10 years. When a company is divested, itsearnings from the beginning of the fiscal year through the divestment dateare included in Group earnings.

Associated Companies

The Group employs the equity method in reporting associated companies,that is, companies in which the Parent Company directly or indirectly con-trols more than 20 percent and no more than 50 percent of the votes, orotherwise exerts a significant influence on operating and financial control.Theconsolidated income statement reports participations in associated compa-nies, less goodwill amortization and dividends, in the financial item“Participation in associated companies’ earnings.” Participations in the taxesof associated companies are included in the Group’s tax expense.The con-

solidated balance sheet reports holdings in associated companies as a finan-cial asset in “Participation in associated companies.” Associated companiesare valued at acquisition cost, less goodwill amortization and adjusted for div-idends and participations in profits or losses after the acquisition date.

Foreign Subsidiaries

The accounts of foreign subsidiaries, all of which have been classified as inde-pendent, have been translated into SEK in accordance with Council recom-mendation RR 8, employing the current method.The exchange rate on thebalance sheet date is used to translate assets and liabilities, whereas the aver-age rate for the year is used to translate revenue and expense. Exchange-rate differences that arise as the result of translation in accordance with thismethod are applied directly against stockholders’ equity in the consolidatedbalance sheet.

Reporting by SegmentReporting of segments is prepared in accordance with Council recommen-dation RR 25. Intentia has defined six primary segments based on geographicarea.The breakdown proceeds from the structure of the Company and thesetup of its internal reporting system. Such an approach is a good reflectionof the discrepancies and differing risks among various markets. Since Intentia’sactivities are not primarily financial in nature, financial items such as interest,gain or loss on the divestment of financial investments, tax expense and non-recurring items are not included in revenue and costs per segment. Financialassets and liabilities, as well as tax claims and tax liabilities, per segment areexcluded for the same reason.

Assessment PoliciesUnless otherwise indicated below, assets, provisions and liabilities have beenassessed at acquisition value.

Revenue Recognition Licenses

For Intentia to recognize license sales in earnings, a number of basic condi-tions must be met. One prerequisite is that neither the license sold nor itspayment is conditional upon a specific milestone in a project or upon com-mitments other than the actual delivery of the license.Agreements for whichat least 80 percent of the total contracted license carries payment terms of12 months or less are recognized in earnings, whereas agreements withlonger terms of payment are not recognized in earnings until they meet thatcriterion. Other prerequisites are that the product being sold must be fullydeveloped and delivery must have been made. Delivery is defined as thepoint at which the customer receives the product.

In addition to licenses, Intentia sells upgrade rights that entitle its cus-tomers to obtain future releases of specific components. However, theagreements do not entail any obligation on Intentia’s part to develop thosereleases. Intentia reports revenue related to this kind of agreement linearlyover the period of the agreement.

Conditional agreements are defined as those in which the license agree-ment is part of or linked to an implementation agreement that covers spe-cific software adaptations and for which payment is conditional upon theattainment of specific installation and/or delivery milestones. This type ofagreement is classified as a contract and is reported in accordance withCouncil recommendation RR 10, contracts and similar commissions. In accor-dance with the recommendation’s principle rule, when the outcome of anassignment can be estimated in a reliable manner, the income and expendi-tures attributable to the assignment should be reported as revenue and costsrespectively in relation to the percentage of the assignment that has beencompleted. An anticipated loss is immediately reported as a cost.

49


ServicesRevenue from a project carried out at a fixed price is recognized as the serv-ice is fully performed. The degree to which such a project has been com-pleted is determined by comparing the accrued cost with the total estimatedcost. If a project is regarded as entailing the risk of loss, individual provisionsare taken continuously based on the assessed risk and amounts. Revenuefrom a project carried out on current account is recognized based on thevalue created as the project is completed.

Sale of IBM Equipment

Revenue from the sale of IBM equipment is recognized upon delivery andinvoicing to the customer. If IBM invoices the customer directly, the commis-sion received from IBM is recognized as revenue once the customer hasapproved the installation.

Fixed AssetsEquipment and buildings are reported after deductions for accumulateddepreciation. Depreciation and amortization is based on the acquisition valueof each asset. Depreciation and amortization rates are calculated based onthe estimated period of use.The depreciation and amortization rates are asfollows:

Acquired product development 20In-house product development 20–33Goodwill 10Buildings 2Expenditure on property not owned by the Group 10–33Equipment 12–33

When Intentia acquires companies, it gains access to a firmly established mar-keting and customer base in a specific market. Since enterprise applicationshave a long replacement cycle, these acquisitions possess strategic value due totheir long-term potential for revenue.Thus, goodwill is amortized over 10 years.

The book value of the asset is checked on each reporting date to deter-mine whether there is any indication that the asset may have declined inworth. If there is any such indication, the asset’s recoverable amount is cal-culated. If an asset does not independently generate cash flow, the recover-able amount is calculated for the cash-generating unit to which it belongs. Acash-generating unit is the smallest group of assets for which it is possible tostipulate ongoing payments that are essentially independent of other assetsor groups of assets. Since the Intentia Group has been deemed to constitutea cash-generating unit, calculation of the recoverable amount for tangible andintangible fixed assets is performed from the point of view of the Group.Thecalculation discounts future cash flows at an interest rate before tax intendedto take the market’s evaluation of risk-free interest and risk into considera-tion. If the calculated recoverable amount is less than the book value, a write-down is performed in compliance with Council recommendation RR 17.

Intangible Assets

Intentia’s development effort consists of three phases: research, developmentand maintenance. Only an expenditure that arises during the developmentphase will be capitalized and thereby posted to the balance sheet as an asset.There are a number of criteria that must be met during the developmentphase for all or part of a project to appear in the balance sheet.Turning theproject into a marketable or internally usable product must be technicallyfeasible, and the project must offer potential financial benefits for Intentia.Moreover, expenses for intangible assets must be calculable and attributableto the assets, and it must be expected that Intentia has the resourcesrequired to complete the development effort.

The acquisition value of an intangible asset is the sum of the expenses thatarise as of the date that it first meets all of the above criteria. Among theexpenditures that are capitalized and thereby included in the acquisitionvalue are those that are for salaries or are otherwise directly related to thedevelopment phase. Indirect expenses that are needed to produce the intan-gible asset and that can be attributed to it in a consistent, reasonable man-ner are also capitalized.

Additional expenses for an intangible asset are added to the acquisitionvalue only if they increase the future financial benefits and exceed the origi-nal assessment, and the expenses can be calculated in a reliable manner. Allother expenses are expensed when they arise.

In-house product development is amortized over an estimated period ofuse of three to five years. Capitalized product development in acquired com-panies is amortized over the estimated period of use, though not for morethan five years.

Tangible Assets

Tangible fixed assets are reported at their acquisition value, less depreciationaccording to plan and any write-downs. A tangible fixed asset is posted toassets in the balance sheet when available information suggests that thefuture financial value associated with the asset is likely to accrue to theGroup and its acquisition value can be calculated in a reliable manner.

The acquisition value consists of the purchase price, including customsduties and selective taxes, as well as expenditures directly related to locatingthe asset at the site and in the condition required to utilize it in accordancewith the purpose for which it was acquired. The purchase price has beenreduced by trade discounts, etc.

Additional expenditures are added to the acquisition value insofar as theasset’s performance is thereby superior to when it was originally acquired.Allother additional expenditures are reported as costs for the period in whichthey arise.

LeasingLeases are classified in the consolidated financial statements as either finan-cial or operating leases.A financial lease entails the predominance of financialrisks and benefits related to ownership having been transferred to the les-see. Otherwise, it is regarded as an operating lease. For a financial lease, thefixed asset is reported as an asset in the balance sheet, and a correspondingliability is entered on the liability side of the balance sheet.The asset is writ-ten off in accordance with the same principle that applies to other assets ofits kind.The finance charge is reported as interest expense. Operating leasesdo not result in any asset or liability items being posted to the balance sheet.Rather, the leasing costs are entered in the income statement allocated overseveral years based on the use of the asset. All leasing agreements in theParent Company are reported according to the rules for operating leases.

Receivables and Liabilities in Foreign CurrenciesReceivables and liabilities denominated in currencies other than SEK aretranslated at the exchange rate prevailing on the balance sheet date in com-pliance with Council recommendation RR 8. Exchange-rate differencesattributable to current receivables and liabilities are included in operatingearnings, while differences from financial receivables and liabilities are reportedas financial items. Gross earnings include net exchange-rate differences as“Other revenue” or “Other costs.”

Financial Instruments and Hedge AccountingA financial asset or liability is posted to the balance sheet when Intentiabecomes a party pursuant to the contractual terms of the instrument. Theexception to the rule is derivative instruments used to hedge contractualcash flows from foreign currencies and/or future interest rates.


50

A financial asset is removed from the balance sheet when the rights pursuantto the agreement are realized or expire, or when control over the asset islost. A financial liability is removed from the balance sheet when the obliga-tion pursuant to the agreement is met or otherwise terminates.

Insofar as a receivable or liability in a foreign currency has been hedgedby a forward contract, it is reported at the contract’s spot rate, and the dif-ference of interest is periodized over the maturity of the contract if longerthan three months. A receivable or liability that is hedged by a forward con-tract with a maturity of less than three months is reported at the contract’sforward rate.

An interest-bearing receivable is reported at its accrued acquisition value.Any premium or discount, as well as transaction costs, are periodized overthe maturity of the asset.The write-down requirement is compared with therecoverable amount on an individual basis.

Following individual assessment, operating receivables have been reportedin the amount expected to be received.

Borrowing expenses are reported in accordance with the main principleof Council recommendation RR 21, that is, they are charged to earnings inthe periods to which they are attributable.The loan component of convert-ible notes has been based on the market rate of interest at the time of flota-tion. The difference between the fair value of the loan and the amountreceived is posted to the premium reserve.The loan is subsequently reval-ued throughout its maturity so as to correspond with its nominal value onits due date.

Inventory (commodities)Inventory is assessed in accordance with Council recommendation RR 2:02.Inventory is reported at its acquisition value or net realizable value, whicheveris less, thereby including the risk of obsolescence.The acquisition value is cal-culated according to the principle of first in, first out (FIFO).

TaxTax reporting complies with Council recommendation RR 9. Intentia reportsboth actual tax paid and deferred tax.Tax is reported in the income state-ment, except when the underlying transaction is posted directly againststockholders’ equity, in which case the associated tax effect is posted againststockholders’ equity. Actual tax is tax that is to be paid or received for thecurrent year, as well as the adjustment of actual tax attributable to previousperiods. A deferred tax asset is reported as a fixed asset, while a deferredtax liability is reported as a provision. Deferred tax is calculated in accor-dance with the liability method on the basis of temporary differencesbetween reported and tax values on assets and liabilities.The amounts arebased on the way in which the temporary differences are expected to evenout, using the tax rates and regulations that have been adopted orannounced as of the balance sheet date. Temporary differences are notincluded in the Group’s goodwill.

For legal entities, untaxed reserves are reported including deferred taxliabilities. However, untaxed reserves are broken down into deferred tax lia-bilities and stockholders’ equity in the consolidated financial statements.Thetax effect for the year attributable to appropriations is reported as deferredtax in the income statement. Deferred tax is based on a tax rate of 28percent.

Deferred tax liabilities for deductible temporary differences and deficitdeductions are reported only insofar as they are likely to entail lower taxpayments in the future. Deferred tax liabilities attributable to deficit deduc-tions are reported only insofar as the deficits are likely to be applicableagainst surpluses for future tax purposes. Only deficits that are deemed tobe utilizable within five years of the accounting date and for which the oper-ations from which they derive are likely to show a profit within the next cal-endar year have been included in the assessment of deferred tax assets.

ProvisionsA provision is posted to the balance sheet in accordance with Council rec-ommendation RR 16, provisions for contingent liabilities and impairment ofassets, whenever Intentia has a formal or informal commitment as the resultof an event that has taken place, an outflow of resources will most likely berequired to settle the commitment and the amount can be reliably estimated.

A contingent liability is reported as a contingency item when there is apossible commitment attributable to events that have taken place and whoseoccurrence is confirmed only by the occurrence or non-occurrence of oneor more uncertain future events that are not wholly within the Company’scontrol or when there is a commitment attributable to events that are notreported as a liability or provision due to the unlikelihood that an outflow ofresources will be required to settle the commitment or that the size of thecommitment is calculable with sufficient precision.

Government SubsidiesGovernment subsidies are reported in accordance with Council recommen-dation RR 28, government subsidies.A government subsidy is reported in thebalance sheet and income statement when it is reasonably certain that theconditions of the subsidy will be met and the subsidy will be obtained.Subsidies are periodized systematically in the same manner and over thesame periods as the costs that they are intended to cover. A governmentsubsidy related to an asset is reported in the balance sheet by reducing theasset’s reported value.

Events after the Balance Sheet DateIn accordance with Council recommendation RR 26, events after the balancesheet date, information is to be furnished concerning significant events thatoccur after the balance sheet date but prior to the signing of the financialreports that do not change the income statement or balance sheet.Significant events are those for which omission of the information wouldaffect the ability of the reader to make correct assessments and well-foundeddecisions.The information should relate the nature of the events and, if pos-sible, their financial impact.

When such significant events occur, Intentia furnishes information aboutthem in the notes and accounting principles section of the annual report.

Employee BenefitsCouncil recommendation RR 29, employee benefits, takes effect in 2004. InIntentia’s judgment, the recommendation will have only a slight impact, sincemost of the Company’s pension commitments are met by contribution-based pension plans that provide for continuous payments to independentagencies or bodies that administer the plans. Pension expenses are reportedwhen the obligation to pay the contribution arises, as the employee becomesso entitled.

UNLESS OTHERWISE INDICATED, ALL AMOUNTS IN THE NOTESARE IN SEK MILLION.

51


NOTE 2

Development per Region for the GroupNorthern Europe

2003 2002 Change

License revenue 307.8 350.1 –42.3Consulting revenue 987.4 1,191.5 –204.1Other revenue 17.9 13.3 4.6Net revenue 1,313.1 1,554.9 –241.8Of which Group sales 102.9 171.7 –68.8

Other operating items, net 2.7 3.4 –0.7

Operating expenses –1,339.4 –1,531.2 191.8Of which depreciation and amortization –13.4 –15.3 1.9

Operating earnings –23.6 27.1 –50.7

Number of employees 1,098 1,219 –121

Operating assets 1,098.9 1,087.7 11.2Current liabilities 809.2 851.4 –42.2

InvestmentsTangible fixed assets 3.6 9.5 –5.9Intangible fixed assets – 3.5 –3.5

Central Europe2003 2002 Change

License revenue 115.0 121.3 –6.3Consulting revenue 283.6 339.2 –55.6Other revenue 4.0 7.1 –3.1Net revenue 402.6 467.6 –65.0Of which Group sales 39.8 26.6 13.2


Operating expenses –441.5 –493.7 52.2Of which depreciation and amortization –9.5 –12.3 2.8

Operating earnings –35.5 –20.9 –14.6

Number of employees 341 392 –51

Operating assets 259.2 247.2 12.0Current liabilities 148.3 149.0 –0.7

InvestmentsTangible fixed assets 2.5 8.2 –5.7Intangible fixed assets – – –

Northwestern Europe2003 2002 Change

License revenue 120.2 134.9 –14.7Consulting revenue 241.6 387.7 –146.1Other revenue 6.2 5.8 0.4Net revenue 368.0 528.4 –160.4Of which Group sales 46.4 113.5 –67.1

Other operating items, net 4.5 3.6 0.9


Operating earnings 9.6 44.1 –34.5


Operating assets 234.4 328.8 –94.4Current liabilities 135.2 217.7 –82.5


Southern Europe2003 2002 Change

License revenue 189.5 244.4 –54.9Consulting revenue 372.2 474.4 –102.2Other revenue – 0.2 –0.2Net revenue 561.7 719.0 –157.3Of which Group sales 59.5 50.3 9.2



Operating earnings 40.8 76.8 –36.0




Americas2003 2002 Change

License revenue 62.8 60.9 1.9Consulting revenue 98.5 162.1 –63.6Other revenue 3.2 0.8 2.4Net revenue 164.5 223.8 –59.3Of which Group sales 15.1 33.8 –18.7

Other operating items, net – – –

Operating expenses –217.4 –318.8 101.4Of which depreciation and amortization –42.6 –29.9 –12.7

Operating earnings –52.9 –95.0 42.1



InvestmentsTangible fixed assets – 0.2 –0.2Intangible fixed assets – – –

52


Asia and Australia/New Zealand2003 2002 Change

License revenue 83.8 150.2 –66.4Consulting revenue 251.8 226.4 25.4Other revenue 1.0 0.8 0.2Net revenue 336.6 377.4 –40.8Of which Group sales 15.5 17.0 –1.5




Number of employees 353 289 64



Other Operations2003 2002 Change

License revenue 336.2 337.1 –0.9Consulting revenue 39.9 137.4 –97.5Other revenue 27.3 99.2 –71.9Net revenue 403.4 573.7 –170.3Of which Group sales 328.3 384.6 –56.3

Other operating items, net – – –

Operating expenses –520.9 –737.6 216.7Of which depreciation and amortization –73.0 –45.9 –27.1Of which write-downs –12.0 –6.0 –6.0

Operating earnings –117.5 –163.9 46.4


Operating assets 2,045.9 1,979.9 66.0Current liabilities 717.1 927.9 –210.8

InvestmentsTangible fixed assets 1.8 1.7 0.1Intangible fixed assets 166.5 128.1 38.4

Eliminations/Adjustments2003 2002 Change

License revenue –332.7 –342.2 9.5Consulting revenue –269.1 –379.4 110.3Other revenue –20.0 –74.3 54.3Net revenue –621.8 –795.9 174.1Of which Group sales –607.5 –797.5 190.0

Other operating items net – – –

Operating expenses 590.4 844.6 –254.2Of which depreciation and amortization –28.6 –61.3 32.7Of which write-downs –19.5 – –19.5

Operating earnings –31.4 48.7 –80.1

Number of employees – – –

Operating assets –2,749.2 –2,478.0 –271.2Current liabilities –907.4 –1,157.5 250.1

InvestmentsTangible fixed assets 16.8 41.7 –24.9Intangible fixed assets 11.2 87.3 –76.1

Total2003 2002 Change

License revenue 882.6 1,056.7 –174.1Consulting revenue 2,005.9 2,539.3 –533.4Other revenue 39.6 52.9 –13.3Net revenue 2,928.1 3,648.9 –720.8Of which Group sales – – –


Operating expenses –3,195.2 –3,788.6 593.4Of which depreciation and amortization –190.5 –190.3 –0.2Of which write-downs –31.5 –6.0 –25.5


Number of employees 2,999 3,319 –320

Operating assets 1,633.6 2,067.9 –434.3Not allocated assets 884.0 1,346.8 –462.8Total assets 2,517.6 3,414.7 –897.1Current liabilities 1,336.6 1,597.3 –260.7Not allocated liabilities 349.4 1,038.0 –688.6

InvestmentsTangible fixed assets 33.7 75.7 –42.0Intangible fixed assets 177.7 218.9 –41.2

Intentia has defined six primary segments based on geographic area. Thebreakdown proceeds from the structure of the Company and the setup ofits internal reporting system. Such an approach is a good reflection of the dis-crepancies and differing risks among various markets. The location of cus-tomers and assets corresponds well with that breakdown.

Segments are not reported for the Parent Company, as it comprises onlyone line of business in one geographic segment.

The geographic areas are as follows: Northern Europe, consisting ofDenmark, Finland, Norway and Sweden; Central Europe, consisting ofAustria, the Czech Republic, Germany, Poland and Switzerland;Northwestern Europe, consisting of Ireland, the Netherlands, the UnitedKingdom and a branch in Belgium; Southern Europe, consisting of France,

53


Italy, Portugal, Spain and Brazil; Americas consisting of the operations in theUnited States; and Asia and Australia/New Zealand, consisting of Australia,with a subsidiary in New Zealand, Japan, and Singapore, with a subsidiary inChina. Other operations consist of the Parent Company, holding companies,development operations and an internal bank.

Secondary segments are not reported, since Intentia has only one line ofbusiness, which consists of supplying and implementing Movex throughassuming total project responsibility.

Internal pricing is based on market prices.Number of employees reflects the total number of employees at the end

of the period.Profit and loss accounting per segment has been prepared in accordance

with Council recommendation RR 25. Since Intentia’s operations are not pri-marily of a financial nature, financial items, such as interest, gain or loss on thedivestment of financial investments, tax expenses and nonrecurring items arenot included among revenue and costs per segment. Likewise, financial assetsand liabilities, as well as tax claims and tax liabilities, per segment are excluded.

For further information about the Group’s earnings after operating earn-ings, refer to the consolidated income statement.

NOTE 3

Employees and Personnel ExpensesAverage Number of Employees, and Salaries and Remuneration by Country

No. employees 2003 Salaries and remuneration 2003

Board of Of which Directors variable Otherand CEO compensation employees

Parent CompanySweden 34 5.0 – 26.7Total in Parent Company 34 5.0 – 26.7

SubsidiariesSweden 1,103 4.9 – 689.0Norway 205 0.6 0.2 158.6Finland 99 1.7 – 56.2Denmark 193 1.1 – 114.9Germany 148 1.6 – 106.8France 268 3.7 – 200.6Spain 110 – – 48.5Portugal 28 – – 9.3United Kingdom 153 1.2 – 106.0Austria 47 1.4 – 30.9Switzerland 91 1.7 0.2 66.4Netherlands 83 – – 54.7Poland 35 0.7 – 10.0Czech Republic 32 0.5 0.1 5.5United States 100 – – 89.0Japan 59 1.9 – 31.9Australia 210 6.9 0.8 114.3Ireland 23 3.1 – 12.0Italy 14 – – 11.4Singapore 46 – – 22.3China 18 – – 3.6Brazil 4 – – 2.0Total in subsidiaries 3,069 31.0 1.3 1,943.9Group total 3,103 36.0 1.3 1,970.6

No. employees 2002 Salaries and remuneration 2002

Board of Of which Directors variable Otherand CEO compensation employees

Parent CompanySweden 36 4.7 – 26.3Malaysia 12 – – 4.0China 16 – – 3.2Total in Parent Company 64 4.7 – 33.5

SubsidiariesSweden 1,165 6.8 0.5 779.5Norway 220 – – 189.2Finland 90 2.7 – 49.1Denmark 217 – – 144.4Germany 190 1.7 – 125.3France 278 3.6 0.9 216.8Spain 139 – – 62.5Portugal 33 – – 13.1United Kingdom 201 – – 160.0Austria 61 1.2 – 35.7Switzerland 94 1.6 – 81.0Netherlands 100 – – 67.0Poland 40 0.5 – 11.6Czech Republic 35 0.3 – 7.5United States 139 2.8 – 142.1Japan 57 3.2 1.5 38.2Australia 194 2.6 0.8 119.4Ireland 24 3.3 – 16.5Italy 13 – – 10.1Singapore 16 – – 14.0Total in subsidiaries 3,306 30.3 3.7 2,283.0Group total 3,370 35.0 3.7 2,316.5

Breakdown by Sex for Each Country

2003 Percentage 2002 Percentage

Men Women Men Women

Parent CompanySweden 32 68 6 94China – – 62 38Malaysia – – 67 33Total in Parent Company 32 68 30 70

SubsidiariesSweden 71 29 70 30Norway 85 15 83 17Finland 63 37 76 24Denmark 77 23 75 25Germany 80 20 82 18France 67 33 68 32Spain 77 23 75 25Portugal 61 39 58 42United Kingdom 73 27 77 23Austria 83 17 87 13Switzerland 82 18 79 21Netherlands 70 30 75 25Poland 71 29 75 25Czech Republic 72 28 69 31United States 70 30 68 32Japan 66 34 70 30Australia 70 30 70 30Ireland 83 17 75 25

54


NOTE 3 CONTINUEDBreakdown by Sex for Each Country

2003 Percentage 2002 Percentage

Men Women Men Women

Italy 71 29 77 23Singapore 67 33 75 25China 50 50 – –Brazil 75 25 – –Total in subsidiaries 73 27 73 27Group total 72 28 72 28

Breakdown by Sex in Corporate Management

Percentage women

2003 2002

GroupBoard of Directors – –Other senior executives 16 14

Parent CompanyBoard of Directors – –Other senior executives 17 –

Salaries, Other Remuneration and Social Security Expenses, 2003Social

Salaries and securityremuneration expenses

Parent Company 20.9 10.8(of which pension expenses) (3.7)

Subsidiaries 1,511.7 463.1(of which pension expenses) (128.8)

Group total 1,532.6 473.9(of which pension expenses) (132.5)

Salaries, Other Remuneration and Social Security Expenses, 2002Social

Salaries and securityremuneration expenses

Parent Company 28.1 10.1(of which pension expenses) (3.3)

Subsidiaries 1,809.3 504.0(of which pension expenses) (145.9)

Group total 1,837.4 514.1(of which pension expenses) (149.2)

Of the Parent Company’s pension expenses, SEK 0.3 million (0.2) was for theCEO. Of the Group’s pension expenses, SEK 1.3 million (3.7) was for CEOsof subsidiaries.

Sick LeaveFrom July 1 through December 31, sick leave represented 3.0 percent of reg-ular working hours in the Parent Company. Continuous sick leave of 60 daysor more accounted for 66 percentage points of total sick leave.

Breakdown of Sick Leave by Age

Percentage

29 or younger 4.030–49 3.050 or older –

Sick leave is not broken down by sex, since one of the categories is belowthe minimum number in accordance with the Annual Accounts Act.

Remuneration PoliciesThe Chairman and members of the Board receive remuneration in accor-dance with resolutions of the annual general meeting.

The Chairman of the Board determines salary and remuneration for thePresident/CEO. The CEO determines salaries and remuneration for theother senior executives of the Group.The process of setting objectives relatedto variable remuneration is based on targets defined by the Board.The sec-tion on Intentia’s employees describes the process in greater detail.

Information about Top Executives

Remuneration and Other Benefits during the YearBasic salary/ Variable

Board remuner- OtherSEK thousand remuneration ation benefits

Olof Ljunggren, Chairman of the Board 200 – –Peter Lorange 150 – –Jan Carlzon 150 – –Tommy H. Karlsson 150 – –Morgan Olsson 150 – –Björn Algkvist, CEO 1,225 – –Other senior executives (5) 10,463 – 122Total 12,488 – 122

Remuneration and Other Benefits during the Year (continued)Financial Other

Pension instruments remuner-SEK thousand costs etc. ation Total

Olof Ljunggren,Chairman of the Board – – – 200

Peter Lorange – – – 150Jan Carlzon – – – 150Tommy H. Karlsson – – – 150Morgan Olsson – – – 150Björn Algkvist, CEO 262 – – 1,487Other senior executives (5) 1,242 – 80 11,907Total 1,504 – 80 14,194

Group management expanded at the beginning of 2004, as a result of whichthe number of other senior executives will exceed the five reported for2003.

Remuneration for the Board totaled SEK 800 thousand (800), of whichthe Chairman received SEK 200 thousand (200).The CEO’s pension-qualify-ing remuneration of SEK 1,225 thousand (1,260) was in the form of a salary.Other benefits totaled SEK 0 thousand (81). Pension expenses for the CEOamounted to SEK 262 thousand (187).

The CEO is subject to a mutual 12-month notice of termination. If theCompany serves notice, additional severance pay corresponding to 12months’ salary must be paid, or 24 months if the notice is given in connectionwith the divestment of Intentia.The terms of the pension for the CEO are com-parable to the terms of the agreement between the Confederation of SwedishEnterprise (Svenskt näringsliv) and the Federation of Salaried Employees inIndustry and Services (PTK).The pensionable age for the CEO is 65.

Variable remuneration is determined in accordance with the Company’spolicy. Variable remuneration is based on the compensation plan that hasbeen adopted, according to which maximum remuneration is 106 percent ofthe basic salary. The entire remuneration is attributable to the Company’searnings trends. No variable remuneration was paid during the year.

The CEO holds the following financial instruments. Holdings in IntentiaInternational: 2,864,700 (954,900) Series A shares and 3,681,235 (793,745)Series B shares, as well as convertibles worth EUR 0 million (4.2).

55


Information about Other Senior ExecutivesOther senior executives are subject to a mutual 12-month notice of termi-nation. If the Company serves notice, additional severance pay correspondingto 6–12 months’ salary must be paid. If the Company serves notice in con-nection with the divestment of Intentia, severance pay corresponding to 12or 24 months’ salary must be paid.

The terms of pensions for senior executives are comparable to the termsof the agreement between the Confederation of Swedish Enterprise (Svensktnäringsliv) and the Federation of Salaried Employees in Industry and Services(PTK). There are contribution-based pension plans for senior executivesemployed abroad according to which Intentia sets aside 7–12 percent of thepension-qualifying income. The pensionable age for other senior executivesemployed in Sweden is 65. Senior executives employed abroad are subject tothe country’s ordinary rules concerning pensionable age.Variable remunera-tion for senior executives is determined in accordance with Company policy.Variable remuneration is based on the compensation plan that has beenadopted, according to which average maximum remuneration is 170 percentof the basic salary.The entire remuneration is attributable to the Company’searnings trends. No variable remuneration was paid during the year.

Salaries of SEK 10.5 million (10.3) constitute pension-qualifying remuner-ation for senior executives. Other benefits amount to SEK 122 thousand(140), and other remuneration is SEK 80 thousand (0). SEK 1,242 thousand(1,080) of the Group’s pension expenses is for other senior executives.Theholdings of other senior executives in Intentia International totaled 79,426Series B shares.

Stock-Option ProgramThe 1998 annual general meeting adopted an employee stock-option pro-gram, according to which options may be awarded free of charge to employ-ees in the United States, where capital gains on this type of option are nottaxed as income from employment, which entails payroll taxes for theCompany.The program initially comprised 200,000 options. Each option entitlesthe holder to acquire one Series B share at an exercise price of SEK 174.50.The exercise period expired on February 19, 2004 and no new shares weresubscribed for. Outstanding options numbered 61,000 (61,000) as ofDecember 31.

In order to ensure performance of the above option commitments, theCompany issued an instrument of debt to a wholly owned subsidiary for anominal amount of SEK 10,000 consisting of 200,000 options at SEK 10 each,representing an increase in capital stock of no more than SEK 2 million byissuing up to 200,000 Series B shares. Each option entitles the holder to sub-scribe for a new Series B share for five years after the date on which the sub-scription option is issued.

The Parent Company’s restricted reserve increased by SEK 2 million as aresult of the above transaction.

NOTE 4

Exchange-Rate DifferencesGroup

2003 2002

Exchange-rate differencesthat affected operating earnings 10.0 18.0

Financial exchange-rate differences –1.5 –8.1Total 8.5 9.9

Parent Company2003 2002

Exchange-rate differencesthat affected operating earnings –0.3 11.5

Financial exchange-rate differences 4.9 –6.0Total 4.6 5.5

NOTE 5

Depreciation, Amortization and Write-Downs of Fixed Assets Group

2003 2002

Depreciation/amortization according to plan by type of assetCapitalized product development expenditures –71.2 –38.7Goodwill –60.1 –69.0Buildings and land –0.3 –0.4Expenditure on property not owned by the Group –11.0 –13.1Equipment –47.9 –69.1Total –190.5 –190.3

Depreciation/amortization according to plan by functionConsulting expenses –30.1 –46.1Product development expenses –80.7 –52.8Sales and marketing expenses –60.0 –72.3Administrative expenses –19.7 –19.1Total –190.5 –190.3

Amortization of capitalized expenditures for product development refers topurchases in conjunction with company acquisitions and in-house productdevelopment.


Depreciation/amortization according to plan by type of assetExpenditure on property not owned by the Group –3.3 –3.9Equipment –0.6 –1.0Total –3.9 –4.9

Depreciation/amortization according to plan by functionConsulting expenses – –0.1Sales and marketing expenses – –0.2Administrative expenses –3.9 –4.6Total –3.9 –4.9

Write-DownsCapitalized expenditures for product development have been assessedaccording to Council recommendation RR 17 which identified the need fora SEK 12.0 million write-down. The write-down has been posted to theincome statement as a product development expense.

Goodwill has been assessed in accordance with Council recommenda-tion RR 17.The SEK 19.5 million write-down of goodwill has been posted tothe income statement as a sales expense.

The following criteria were used to assess goodwill:Average interest expense 5.6%Risk-free interest 4.4%Risk premium 5.0%Tax rate 30.0%

The SEK 305.2 million write-down of the Parent Company’s shareholdings insubsidiaries has been posted to the income statement as a financial expense.


56

NOTE 6

Financial IncomeGroup

2003 2002

Interest income 20.6 29.5Other financial income 115.1 61.1Total 135.7 90.6


Interest income from Group companies 50.0 43.7Other interest income 9.2 12.9Other financial income 174.2 3.9Total 233.4 60.5

NOTE 7

Financial ExpensesGroup

2003 2002

Interest expenses –44.3 –48.3Other financial expenses –41.2 –83.8Total –85.5 –132.1


Interest expenses to Group companies –42.9 –26.6Other interest expenses –27.6 –33.5Other financial expenses –326.8 –16.5Total –397.3 –76.6

NOTE 8

Tax on Profit/Loss for the YearGroup

2003 2002

Actual tax –45.2 –71.1

Deferred tax fortemporary differences –8.7 –26.6

Deferred tax revenue in the deficit deductioncapitalized during the year 5.9 110.6

Deferred tax expense resulting from utilizationof previously capitalized deficit deduction –10.0 –

Revaluation of previous years’ tax claims –170.3 –6.7Total deferred tax –183.1 77.3Total –228.3 6.2


Actual tax –9.1 –

Deferred tax fortemporary differences – –3.6

Deferred tax in the deficit deductioncapitalized during the year – 28.9

Deferred tax expense resulting from utilizationof previously capitalized deficit deduction –10.0 –

Revaluation of previous years’ tax claims –85.1 –Total deferred tax –95.1 25.3Total –104.2 25.3

Reconciliation of Effective TaxGroup Earnings Actual Deferred

before tax tax tax

Sweden* –341,957 –13,217 –96,621Foreign – profit-making 132,251 –29,632 –8,619Foreign – entailing a loss –222,604 –2,334 12,114Total before goodwill –432,310 –45,183 –93,126Goodwill and Group adjustments 241,494 – –89,958Total before minority interests –190,816 –45,183 –183,084Minority interests – – –Total after minority interests –190,816 –45,183 –183,084

* Of which of SEK 305.2 million in non-deductible write-down of shares inGroup companies and SEK 85.9 million in financial receivables.

Reconciliation of Effective TaxGroup Earnings Tax

after tax rate

Sweden –451,795 –Foreign – profit-making 94,000 22.4%Foreign – entailing a loss –212,824 –Total before goodwill –570,619 –Goodwill and Group adjustments 151,536 –Total before minority interests –419,083 –Minority interests 8,002 –Total after minority interests –411,081 –

Reconciliation of Effective TaxParent Company 2003 2002

Amount Percent Amount Percent

Earnings before tax** –269.4 –97.1Tax according to prevailingtax rate for Parent Company 75.4 28.0 27.2 28.0

Capital contributions – – –1.3 –1.3Non-taxable revenue – – 3.2 3.4Non-deductible costs –85.5 –31.7 –0.1 –0.1Increased deficit deductions – – –29.1 –30.0Deficit deductions utilized 10.1 3.7 – –Foreign withholding tax –9.2 –3.4 – –Effective tax –9.2 –3.4 – –

** Of which SEK 305.2 million in non-deductible write-down of shares inGroup companies and SEK 85.9 million in financial receivables.

NOTE 9

Earnings per Share

2003 2002

Earnings per share after dilutionLoss for the period –411.1 –143.5

Adjusted earnings –411.1 –143.5Average no. outstanding common shares (million) 69.0 36.5

No. shares included in calculation of earnings per share 69.0 36.5

Earnings per share after dilution (SEK) –6.0 –3.9

Since earnings per share improve as a result of adjustment for conversion ofconvertible notes and options, dilution effects are not included when calcu-lating earnings per share. For additional information about earnings per share,refer to the income statement.


57

during the year raised the discount factor. Based on this calculation, a deci-sion was made to write down goodwill in the amount of SEK 19.5 million.The write-down for the year has been posted to the income statement as asales expense.

NOTE 11

Tangible AssetsGroup

12-31-03 12-31-02

Buildings and landAcquisition value at beginning of year 14.7 14.1Translation differences for the year –1.4 0.6Acquisition value at year-end 13.3 14.7

Depreciation according to plan at beginning of year –3.9 –2.5Translation differences for the year 0.2 –1.0Depreciation for the year –0.3 –0.4Depreciation according to plan at year-end –4.0 –3.9Residual value according to plan at year-end 9.3 10.8

Expenditure on property not owned by the GroupAcquisition value at beginning of year 82.7 84.3Acquisitions 1.9 0.2Reclassifications 9.0 –Translation differences for the year –9.8 –1.8Acquisition value at year-end 83.8 82.7

Depreciation according to plan at beginning of year –38.2 –22.6Depreciation for the year –11.0 –13.1Reclassifications –5.9 –Translation differences for the year 8.1 –2.5Depreciation according to plan at year-end –47.0 –38.2Residual value according to plan at year-end 36.8 44.5

EquipmentAcquisition value at beginning of year 417.4 387.6Acquisitions 16.1 33.8Financial leases 16.8 41.7Reclassifications –9.0 –Divestments –44.8 –45.4Translation differences for the year –17.9 –0.3Acquisition value at year-end 378.6 417.4

Depreciation according to plan at beginning of year –250.2 –204.0Divestments 18.3 29.1Reclassifications 5.9 –Depreciation for the year –47.9 –69.1Translation differences for the year 13.6 –6.2Depreciation according to plan at year-end –260.3 –250.2Residual value according to plan at year-end 118.3 167.2

Financial leases refer primarily to financing of Company vehicles.

Assets held through operating leasesLeasing fees paid during the fiscal year 140.4 186.6Contracted future leasing fees 608.8 666.4

Intentia International has not paid any dividends to date.The Board expectsthe Company’s dividend policy to remain restrictive in the next few years.

NOTE 10

Intangible AssetsGroup

12-31-03 12-31-02

Capitalized product development expendituresAcquired product developmentAcquisition value at beginning of year 30.6 27.1Acquisitions – 3.5Translation differences for the year –1.0 –Acquisition value at year-end 29.6 30.6

Amortization according to plan at beginning of year –21.3 –17.5Amortization for the year –3.8 –3.8Translation differences for the year 0.9 –Amortization according to plan at year-end –24.2 –21.3Residual value according to plan at year-end 5.4 9.3

Internally generated product development expendituresAcquisition value at beginning of year 276.1 126.0Acquisitions 176.6 150.1Acquisition value at year-end 452.7 276.1

Amortization according to plan at beginning of year –29.8 –0.9Amortization for the year –67.4 –28.9Amortization according to plan at year-end –97.2 –29.8

Write-downs at beginning of year –6.0 –Write-downs for the year –12.0 –6.0Write-downs at year-end –18.0 –6.0Residual value according to plan at year-end 337.5 240.3

GoodwillAcquisition value at beginning of year 742.2 710.8Acquisitions 1.0 65.3Translation differences for the year –23.5 –33.7Acquisition value at year-end 719.7 742.2of which accumulated translation differences 3.6 2.1

Amortization according to plan at beginning of year –393.5 –328.4Amortization for the year –60.1 –69.0Translation differences for the year 13.5 3.9Amortization according to plan at year-end –440.1 –393.5

Write-downs for the year –19.5 –Translation differences for the year 2.1 –Write-downs at year-end –17.4 –Residual value according to plan at year-end 262.2 348.7

The value of goodwill is checked on each reporting date to determinewhether there are indications that a write-down is needed. The recoveryamount is calculated as a useful value by comparing the value of the assetwith the future net cash flow that corresponding units are expected to gen-erate.The calculation discounts these cash flows at an interest rate before taxthat considers the market’s assessment of risk-free interest and risk, as wellas the Company’s capital structure. The increase in the equity component

58


NOTE 11 CONTINUED

As of the balance sheet date, the due dates are broken down as follows:Within one year 127.3 145.9More than one year but within five years 444.2 331.7After five years 37.3 188.8

Assets held through operating leases include leases for premises.

Parent Company12-31-03 12-31-02

Expenditure on property not owned by the GroupAcquisition value at beginning of year 28.8 28.8Acquisitions 0.2 –Acquisition value at year-end 29.0 28.8

Depreciation according to plan at beginning of year –10.0 –6.1Depreciation for the year –3.4 –3.9Depreciation according to plan at year-end –13.4 –10.0Residual value according to plan at year-end 15.6 18.8

EquipmentAcquisition value at beginning of year 5.8 5.9Divestments –0.4 –0.2Acquisitions 0.1 0.1Acquisition value at year-end 5.5 5.8

Depreciation according to plan at beginning of year –4.7 –3.8Depreciation for the year –0.6 –0.9Divestments 0.4 –Depreciation according to plan at year-end –4.9 –4.7Residual value according to plan at year-end 0.6 1.1

Assets held through operating leasesLeasing fees paid during the fiscal year 83.6 46.6Contracted future leasing fees 452.0 352.8

As of the balance sheet date, the due dates are broken down as follows:Within one year 81.6 54.3More than one year but within five years 333.2 177.9After five years 37.2 120.6

Assets held through operating leases include leases for premises.

NOTE 12

Shares in Group CompaniesParent Company

12-31-03 12-31-02

Accumulated acquisition valueAt beginning of year 1,461.6 1,457.1Stockholders’ contributions 45.8 4.5At year-end 1,507.4 1,461.6

Accumulated write-downs

At beginning of year – –Write-downs for the year –305.2 –At year-end –305.2 –

Residual book value

At beginning of year 1,461.6 1,457.1Change for the year –259.4 4.5At year-end 1,202.2 1,461.6

The write-down for the year has been posted to the income statement as afinancial expense.

Acquisition of Subsidiaries

Value of acquired assets and liabilities according to the acquisition analysis2003 2002

Intangible fixed assets 1.0 65.3Operating receivables – 0.1Liquid funds – 2.0Total 1.0 67.4

Purchase sum paid 1.0 67.4Liquid funds in the acquired company – –2.0Effect on Group’s liquid funds 1.0 65.4

Specification of Parent Company and Group Shareholdings in Group CompaniesNumber Percentage Book

Subsidiary/Co. reg. no./Reg’d. office of shares held value

Parent Company’s shares in subsidiariesIntentia Research & Development AB,556293-2326. Danderyd, Sweden 1,000 100.0 7.0

Intentia Operations AB,556224-1348. Danderyd, Sweden 103,000 100.0 161.2

Intentia Americas Inc., Delaware, USA 1,000 100.0 –Voto Pty, Ltd, New South Wales, Australia 8,000 100.0 –Intentia Finance SA, Neuchatel, Switzerland 6,500 100.0 1,034.0Total, Parent Company’s sharesin subsidiaries 1,202.2


59

Second-tiersubsidiary/Co. reg. no./Reg’d. office No. shares Pctg. held

Shares in second-tier subsidiariesIntentia Danmark A/S, Odense, Denmark 26 100.0Intentia Norge AS, Asker, Norway 1,116,696 86.9Intentia Oy, Espoo, Finland 1,000 100.0Intentia (UK) Ltd, Cardiff, United Kingdom 68,987 100.0Intentia Austria EDV-Beratungs Gesm. b. h.,Graz, Austria 5,000 100.0

Intentia Consulting S.A.,Osny Cedex,France 10,000 100.0

Intentia Deutschland GmbH, Langenfeldt,Germany 100.0

Intentia Consulting Sverige AB, 556235-9702,Danderyd, Sweden 53,000 100.0

Intentia Benelux BV, Eemland,Netherlands 40 100.0

Intentia Switzerland AG, Zug, Switzerland 500 100.0Källvex AB, 556313-4633.Stockholm, Sweden 10,000 100.0

Intentia Consulting S.A., Barcelona, Spain 5,000 100.0Intentia Consulting-Informática SA,Lisbon, Portugal 5,000 100.0

Intentia Polska Sp. z o.o.,Warsaw, Poland 750 75.0Intentia CZ a.s., Prague, Czech Republic 1,900 100.0Intentia Ireland Ltd, Dublin, Ireland 43,480 100.0Logicent Holding i likvidation AB, 556566-5998.Jönköping, Sweden 141,800 100.0

Intentia Japan K.K.,Tokyo, Japan 600 100.0Intentia Australia Pty Ltd, New South Wales, Australia 204,000 100.0Intentia Asia Pacific Pte ltd, Singapore 2 100.0Intentia Consulting Italy srl., Milan, Italy 100.0Intentia Consulting do Brazil Ltda; Sao Paulo, Brazil 114,511 100.0

The percentages refer to the equity component, which corresponds to thevote component for the total number of shares.

Equity component/vote component is unchanged from the previous year.

NOTE 13

Participations in Associated CompaniesGroup

12-31-03 12-31-02

At beginning of year 6.7 8.2Write-downs – –0.1Reclassifications to shares insecond-tier subsidiaries – 0.6

Translation differences –0.3 0.2Loss for the year –3.4 –2.2Book value at year-end 3.0 6.7


At beginning of year 0.6 0.6Book value at year-end 0.6 0.6

Specification of Parent Company and Group Shareholdings in Associated CompaniesShare of

Adjusted Participation/ capital’sstockholders’ equity/ number value inprofit/loss for the year in percent the Group

Intentia Thailand Co Ltd 0.9/ 30,000/ 0.90.1 30.0 –

Industrisystem i Karlskoga AB 2.1/ 667/ 2.1– 20.0 –

Total 3.0

The Parent Company’s holdings are in Intentia Thailand. Adjusted stockhold-ers’ equity refers to the portion of the Company’s equity owned, includingthe equity component of untaxed reserves. Profit/loss for the year refers tothe Group’s participation in the company’s earnings after tax, including theequity component of the change in untaxed reserves for the year.

NOTE 14

Receivables from Group CompaniesParent Company

12-31-03 12-31-02

At beginning of year 2.2 5.4Settled receivables –2.2 –3.2Book value at year-end – 2.2

NOTE 15

Information about AffiliationsBeyond the affiliations specified for the Group, the Parent Company has affil-iations that entail a controlling interest with its subsidiaries (see Note 12).

Transactions with associated companies are at market prices.These trans-actions are not substantial from the point of view of either the Group or theParent Company.

Of the Parent Company’s total sales, 65 percent (44) are to other Groupcompanies. Of the Parent Company’s purchases, 48 percent (79) are fromother Group companies.

NOTE 16

Other Long-Term Holdings of SecuritiesGroup

12-31-03 12-31-02

At beginning of year 4.3 4.5Assets divested –0.6 –Translation differences 0.1 –0.2Book value at year-end 3.8 4.3

NOTE 17

Other Long-Term ReceivablesGroup

12-31-03 12-31-02

At beginning of year 74.7 79.2Additions 3.9 –Write-down/payoff –60.0 –4.5Translation differences –0.6 –Book value at year-end 18.0 74.7


60

NOTE 18

Deferred TaxGroup

12-31-03 12-31-02

Deferred tax assetsTemporary differences 44.0 67.7Deficit deductions 229.6 405.6Total deferred tax assets 273.6 473.3

Deferred tax liabilitiesTranslation differences – 33.5Temporary differences 6.1 16.1Total deferred tax liabilities 6.1 49.6

Of the above change between years, SEK –6.6 million has been posted directlyto stockholders’ equity.


Deferred tax assetsDeficit deductions 140.9 236.0Total deferred tax assets 140.9 236.0

The temporary differences leading to a deferred tax asset of SEK 44 millionand a deferred tax liability of SEK 6 million, for a net asset of SEK 38 million,are attributable to the following balance sheet items:

Temporary Differences

Group12-31-03 12-31-02

Fixed assets 10.5 5.3Current assets 6.8 –Long-term liabilities 0.4 3.9Current liabilities 45.7 55.1Total deferred tax assets 63.4 64.3

Fixed assets –5.8 –Current assets –19.6 –12.7Long-term liabilities –0.1 –Total deferred tax liabilities –25.5 –12.7

Net deferred tax assets 37.9 51.6

A large percentage of the taxable deficit deductions are attributable to theSwedish Group, offering the possibility that taxable surpluses can be set offduring the same period as the deductions for the temporary differences aretaken in the tax return. In addition to capitalized deficit deductions of SEK 230million, there are deficit deductions of SEK 462 million that are not posted toassets in the consolidated balance sheet.

Utilization of the capitalized deficit deductions is not subject to any timelimit.

Cost savings during 2003 and additional cost reductions in 2004, com-bined with royalty payments to Swedish companies, form the basis for beingable to use deficit deductions within the given time criteria.

Utilization of the non-capitalized deficit deductions, the deferred taxassets for which is SEK 462 million, is subject to the following restrictions:

Expires Within Within Within After1 year 2–3 years 4–5 years 5 years

Deferred tax assets 46.5 29.3 90.1 83.0

The tax authorities denied Intentia International AB a deduction of SEK 372million for losses associated with the liquidation of subsidiaries in the taxassessment for 2002. Intentia appealed the decision to the county adminis-trative court. Since the Company believes that it has an excellent chance ofgaining approval for its claim in a higher court, it does not see any reason towrite down the value of deferred tax assets in the amount of SEK 104 mil-lion. If, contrary to the opinion of Intentia and independent tax experts, thelegal appeals process leads to a denial, the effect on liquidity will arise at atime when deficit deductions of SEK 372 million can be utilized.

NOTE 19

Prepaid Expenses and Accrued IncomeGroup

12-31-03 12-31-02

Prepaid rent 7.7 15.4Accrued license revenue 44.9 204.5Accrued consulting revenue 43.7 79.8Other 73.6 55.9Total 169.9 355.6


Prepaid rent 15.5 11.0Financing costs 4.8 11.5Other 5.0 3.4Total 25.3 25.9

NOTE 20

Other ProvisionsGroup

12-31-03 12-31-02

Ongoing disputes 23.6 –Pensions 6.8 –Total 30.4 –


Total – –

Provision for ongoing disputes is based on estimated exposure as of year-end.

61


NOTE 21

Interest-Bearing LiabilitiesGroup

12-31-03 12-31-02

Liabilities to credit institutions 173.1 296.2Financial leases 62.9 78.0Convertible notes 71.1 551.6Total 307.1 925.8Portion payable more than five years after thebalance sheet date – –


Convertible notes 71.1 551.6Portion payable more than five years after thebalance sheet date – –

Information about Convertible NotesIntentia issued convertible notes in the euro market during 1999.The notestotaled EUR 8 million and carry 5 percent interest on the balance sheet date.The loan runs until July 2006 at a conversion price of SEK 105.16 per sharebased on a SEK-to-EUR exchange rate of 8.72. If the Intentia share trades atleast 8 percent above the conversion price for 20 consecutive sessions, theCompany is entitled to call for compulsory conversion whenever it deemsappropriate. The outstanding notes correspond to 679,954 Series B sharesupon full conversion.

Financial LeasesFinancial leases in the Group refer to future leasing fees attributable to agree-ments classified as financial leases, with consideration given to residual values.Payments that fall due within one year have been treated as current liabilities.As of the balance sheet date, the due dates are broken down as follows

12-31-03 12-31-02

Within one year 18.3 21.5More than one year but within five years 7.9 16.7After five years – –Total 26.2 38.2

NOTE 22

Financial InstrumentsManagement of Financial RiskAs an international supplier of systems solutions that are sold and imple-mented in some 40 countries, Intentia is exposed to changes in the variousindividual economies.

Intentia manages financial risk within the framework of the Group’sFinance organization based on the financial policy adopted by its Board.Thepurpose of financial risk management is to minimize the Group’s capital costsby means of efficient financing and asset management, as well as monitoringof the Group’s financial risks.The task of Intentia Finance SA, the company’sinternal bank, is to coordinate internal financial flows and the management offinancial risk.

Transaction ExposureTransaction exposure arises as the result of revenue and costs having accruedin different currencies. In the first place, an agreement with a customer maybe in a currency other than that of the country in which it is signed. In the

second place, resources from Intentia units in other countries may be used inimplementation projects for which the customer is invoiced in an agreed-upon currency. Since the signing of agreements, and sometimes the imple-mentation of projects as well, varies substantially in terms of predictability,forecasted flows are not hedged. Intentia’s objective is to hedge 100 percentof contracted flows that are posted to the balance sheet whenever the totalvalue in a currency exceeds EUR 50,000 within an operational unit.The cur-rency to which the Company has the greatest exposure is USD.

Contracted currency flows are hedged by means of loans in foreign cur-rencies or currency futures. Hedging is done primarily through internal futureswith Intentia Finance SA.The net exposure that arises after exercise of inter-nal futures is externally hedged through Intentia Finance SA.

Translation ExposureIntentia’s foreign subsidiaries are financed by stockholders’ equity and internalloans from Intentia Finance SA. Internal loan financing is carried out primarilyin the borrowing subsidiary’s currency, and hedging is done through IntentiaFinance SA. If a subsidiary borrows in a foreign currency, hedging is to bedone through the subsidiary. In addition, earnings are affected by translationexposure when the earnings of foreign subsidiaries are translated to SEK.Thetranslation of assets and liabilities in foreign subsidiaries to SEK also has animpact on Group stockholder’s equity. Stockholders’ equity in foreign sub-sidiaries is not hedged.

Exchange-Rate Exposure in the Balance SheetNet Net Forward

Currency (SEK thousand) receivable liability contracts

USD 210,550 – –203,683JPY 186,437 – –188,385EUR 106,906 – –34,897NOK – 80,977 80,320AUD 72,140 – –78,666GBP – 58,204 69,100Other 136,481 – –123,540

Exchange-rate exposure in the balance sheet has been hedged by means offorward contracts covering approximately 91.4 percent of total exposure.

Interest-Rate RisksIntentia has had low net borrowings in recent years. As a result, theCompany’s interest-rate risk has been limited. Borrowings and investmentsare at short periods of fixed interest.

Loan Terms, Rate of Interest and Maturities/Renegotiation of Interest RatesWithin Within After1 year 2–5 years 5 years Total

Debts to credit institutions 173.1 – – 173.1Financial leases 18.3 44.6 – 62.9Convertible notes – 71.1 – 71.1Total 191.4 115.7 – 307.1

Debts to credit institutions consist of the exercised portion of the syndicatedloan facility. Intentia’s bank financing is comprised primarily of a syndicatedloan facility totaling EUR 32 million.The current facility runs through May 31,2005. Collateral for the facility consists of shares in Group companies andchattel mortgages in second-tier subsidiaries. Customary covenants are basedon earnings and liquidity trends, as well as the factors that affect them.Thesyndicated loan carries an interest margin of 3.5 percent.

Financial leases are charged an interest rate of STIBOR + 1 percent.Intentia has issued convertible notes in the euro market.The EUR 8 million

loan runs until July 2006.


62

NOTE 22 CONTINUED

The convertible notes carry an interest rate of 5 percent.Transactions between Intentia Finance SA and the other units of the

Group are conducted at market prices.

Credit RiskIntentia monitors any credit risks on a running basis. Whenever a need isdeemed to have arisen, the Company sets aside reserves for any doubtfulclaims.There was no significant credit risk as of the balance sheet date.

Fair ValueThe fair values of the following financial instruments, less transaction costs, dif-fer from the book values in the balance sheet as follows:

Reported Fairvalue value

Convertible notes 71.1 74.6

The fair value has been arrived at by recalculating the future value uponmaturity at the exchange rate on the balance sheet date.

NOTE 23

Overdraft FacilitiesGroup

12-31-03 12-31-02

Credit limit granted 17.6 43.6Unutilized portion –17.6 –41.8Credit utilized – 1.8


Credit limit granted 10.0 25.0Unutilized portion –10.0 –25.0Credit utilized – –

NOTE 24

Accrued Expenses and Prepaid IncomeGroup

12-31-03 12-31-02

Prepaid licenses 352.1 314.9Prepaid revenue 16.4 19.8Accrued rent 48.4 51.1Accrued salaries 119.7 199.8Accrued severance pay 9.5 1.5Accrued debts for vacation pay 204.4 216.6Other 57.2 212.3Total 807.7 1,016.0


Accrued rent 43.8 51.1Accrued debts for vacation pay 5.8 4.4Accrued salaries 1.1 1.0Accrued interest – 12.5Other 3.0 3.4Total 53.7 72.4

NOTE 25

Assets PledgedGroup

12-31-03 12-31-02

Chattel mortgages 295.0 –Property mortgages – 3.0Shares in Group companies 548.3 724.5Bank deposits 21.9 –Total 865.2 727.5


Shares in Group companies 1,202.2 1,461.6Bank deposits 1.4 –Total 1,203.6 1,461.6

Shares in Group companies serve as collateral for short-term loans.

Contingent Liabilities

Group12-31-03 12-31-02

Bank guarantees 13.0 45.9Guarantees for the benefit of Group companies 1.3 –Tax dispute 104.0 104.0Total 118.3 149.9


Bank guarantees 5.4 29.9Guarantees for the benefit of Group companies 1.3 –Contingent liabilities for subsidiaries 82.5 102.6Tax dispute 104.0 104.0Total 193.2 236.5

The Parent Company has issued fixed-term performance guarantees regard-ing the financial position of the subsidiaries. Contingent liabilities correspondto the estimated commitment as of the balance sheet date.

NOTE 26

Adjustment for Items Not Included in Cash FlowGroup

2003 2002

Depreciation and amortization 190.5 190.2Write-downs 31.5 –Non-realized exchange rate differences 37.7 121.3Provisions for pensions –1.8 8.3Other provisions 24.0 –Total 281.9 319.8


Depreciation and amortization 3.9 4.9Non-realized exchange rate differences 1.3 11.8Total 5.2 16.7

63


NOTE 27

Liquid FundsGroup

2003 2002

Cash and bank balances 232.9 191.1Short-term investments 61.2 211.7Total liquid funds 294.1 402.8


Cash and bank balances 147.0 143.1Total liquid funds 147.0 143.1

Short-term investments in the balance sheet at year-end totaled SEK 61.2million (211.7) for the Group and SEK 0 million (0) for the Parent Company,of which SEK 59.1 million in the Group consisted of financial instruments witha maturity of up to three months.

NOTE 28

Auditors’ Remuneration and Reimbursement forExpensesGroup

2003 2002

KPMGAuditing assignments 6.2 7.4Other assignments 2.4 2.7


KPMGAuditing assignments 1.6 1.2Other assignments 1.1 0.6

NOTE 29

Events after the Balance Sheet DateThe Board resolved in late December to carry out an issue of new sharesdirected toward Symphony Technology Group and representing 26 percentof Intentia’s capital, subject to approval by an extraordinary general stock-holders’ meeting.The issue of new shares would raise a total of SEK 256 mil-lion before underwriting expenses, and Symphony Technology Group wouldobtain options representing an additional 10 percent of Intentia’s capital at asubscription price of SEK 10 each.The options would mature at four years.An extraordinary general stockholders’ meeting on February 6, 2004approved the Board’s resolution on the issue of new shares, as well as aninstrument of debt consisting of detachable options in accordance with theBoard resolution in December 2003.

Danderyd, March 18, 2004

Romesh Wadhwani Jan CarlzonChairman

Bob Evans Tommy H. Karlsson

Morgan Olsson Bryan Taylor

Björn AlgkvistPresident and Chief Executive Officer

The consolidated income statement and balance sheet, as well as the ParentCompany’s income statement and balance sheet, will be submitted for adop-tion by the annual general meeting on May 11, 2004.

Our auditors’ report was submitted on March 18, 2004.

Lars Gattberg Stefan ÄlgneCertified Public Accountant Certified Public AccountantKPMG KPMG

64

Audit ReportTo the general meeting of the stockholders of

Intentia International AB (publ)

Corporate identity number 556387-8148We have audited the annual accounts, the consolidated accounts, theaccounting records and the administration of the Board of Directors and theChief Executive Officer of Intentia International AB (publ) for the year 2003.These accounts and the administration of the Company are the responsibil-ity of the Board of Directors and the Chief Executive Officer. Our responsi-bility is to express an opinion on the annual accounts, the consolidatedaccounts and the administration based on our audit.

We conducted our audit in accordance with generally accepted auditingstandards in Sweden.Those standards require that we plan and perform theaudit to obtain reasonable assurance that the annual accounts and the con-solidated accounts are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosuresin the accounts. An audit also includes assessing the accounting principlesused and their application by the Board of Directors and the Chief ExecutiveOfficer, as well as evaluating the overall presentation of information in theannual accounts and the consolidated accounts. As a basis for our opinionconcerning discharge from liability, we examined significant decisions, actionstaken and circumstances of the Company in order to be able to determinethe liability, if any, to the Company of any Board member or the ChiefExecutive Officer. We also examined whether any Board member or theChief Executive Officer has, in any other way, acted in contravention of theCompanies Act, the Annual Accounts Act or the Articles of Association.Webelieve that our audit provides a reasonable basis for our opinion set outbelow.

The annual accounts and the consolidated accounts have been preparedin accordance with the Annual Accounts Act and, thereby, give a true and fairview of the Company’s and the Group’s financial position and results ofoperations in accordance with generally accepted accounting principles inSweden.

We recommend to the general meeting of stockholders that the incomestatements and balance sheets of the Parent Company and the Group beadopted, that the loss for the Parent Company be dealt with in accordancewith the proposal in the administration report and that the members of theBoard of Directors and the Chief Executive Officer be discharged from liabil-ity for the financial year.

Danderyd, March 18, 2004

Lars Gattberg Stefan ÄlgneCertified Public Accountant Certified Public AccountantKPMG KPMG

65

Definitions of Financial Ratios

Profitability

Gross marginGross earnings expressed as a percentage of net revenue.

Operating marginOperating earnings expressed as a percentage of net revenue.

Net profit marginProfit for the year expressed as a percentage of net revenue.

Break-even pointThe total of consulting costs, indirect expenses and cost for license, less otheroperating items net.

Interest coverage rateEarnings after financial items, but before interest expenses, divided by inter-est expenses.

Capital

Capital employedTotal assets less current non-interest-bearing operating liabilities includingdeferred tax.The average for the year is calculated using monthly figures.

Equity/Assets ratioStockholders’ equity plus minority interest, as a percentage of total assets.

Share of risk-bearing capitalStockholders’ equity, minority interests, convertible notes and deferred taxexpressed as a percentage of total assets less cash and bank balances and lessshort-term investments.

Net indebtednessInterest-bearing liabilities less liquid funds.

Debt/Equity ratioNet indebtedness as a percentage of stockholders’ equity including minorityinterests.

Measures of Return

Return on capital employedOperating earnings plus financial income, as a percentage of average capitalemployed, calculated using monthly figures.

Return on stockholders’ equityProfit for the year as a percentage of average stockholders’ equity, calculatedusing monthly figures.

Value added per employeeOperating earnings before depreciation and personnel expenses divided bythe average number of employees for the period.

Value-added ratioValue added per employee for the period divided by total personnelexpense per employee.

Cash flow/Net revenueCash flow for the period before financing activities divided by net revenuefor the period.

Working capital 4 quarters/Net revenue 12 monthsCurrent assets excluding liquid funds less short-term liabilities less short-term loans as a percent of net revenue for the past 12 months. Average forthe year is calculated using quarterly figures.

Financial Data per Share

Earnings per shareProfit for the year divided by the average number of shares during the year,calculated in accordance with the Swedish Financial Accounting StandardsCouncil’s (Redovisningsrådet’s) recommendation RR18.

Earnings per share with full dilutionProfit for the year, excluding the interest expense of the convertible notesadjusted by the applicable tax, divided by the average number of shares,options, and convertible notes during the year, calculated in accordance withthe Swedish Financial Accounting Standards Council’s (Redovisningsrådet’s)recommendation RR18.

Stockholders’ equity per shareStockholders’ equity as of the closing date divided by the number of sharesoutstanding at year-end.

Riskbearing capital per shareStockholders’ equity, minority interests, convertible notes and deferred taxdivided by the number of shares outstanding at year-end.

66

Romesh Wadhwani

Chairman of the Board

Jan Carlzon

Member of the Board

Bob Evans

Member of the Board

Tommy H. Karlsson

Member of the Board

Morgan Olsson

Member of the Board

Bryan Taylor

Member of the Board

Björn Algkvist

President and Chief Executive Officer

67

Board of DirectorsRomesh Wadhwani, born in 1947, Ph.D. in Technology and Chairman of the Board.Lead Partner in Symphony Technology. Member of the Board since 2004. Member ofthe Boards of Information Resources, Inc., Symphony Service Corp., SymphonyRPM,Inc., GERS, Inc. and Industri-Matematik International. Holding in Intentia International: –

Jan Carlzon, born in 1941, Director. Member of the Board since 1996. Chairman ofthe Boards of Ledstiernan AB and Karl Stockman Investment BV. Member of theBoard of E. Öhman J:or AB. Holding in Intentia International: 5,400 Series B shares.

Bob Evans, born in 1952, Director. Partner in Symphony Technology Group. Memberof the Board since 2004. Chairman of the Board of Trigo Technologies Inc. Member ofthe Boards of Servigistics Inc. and Symphony Services Inc. Holding in IntentiaInternational: –

Tommy H. Karlsson, born in 1946, Management Consultant. Member of the Boardsince 2001. Chairman of the Boards of InterdeanInterconnex Inc, Global GardeningProducts S.A. and MSC S.A. Member of the Boards of Elekta AB and Knurr AG.Holding in Intentia International: –

Morgan Olsson, born in 1950, Director. Member of the Board since 1992. Partner inNordic Capital Svenska AB. Chairman of the Board of Elmo Leather AB. Member ofthe Board of Anticimex Europe AB. Deputy Member of the Board of MölnlyckeHealth Care AB. Holding in Intentia International: 2,352 Series B shares.

Bryan Taylor, born in 1970, Director. Partner in Symphony Technology Group.Member of the Board since 2004. Member of the Boards of IMI Holdings, GERS Inc.and IRI Inc. Holding in Intentia International: –

Björn Algkvist, born in 1959, President and Chief Executive Officer. Member of theBoard since 1992. Holding in Intentia International: 2,864,700 Series A and 3,681,235Series B shares.

AuditorsAuditors

Lars Gattberg, born in 1944, Certified Public Accountant, KPMG. Auditor for theCompany since 1990. Stefan Älgne, born in 1955, Certified Public Accountant, KPMG.Auditor for the Company since 1990.

Deputy Auditors

Kari Falk, born in 1952, Certified Public Accountant, KPMG. Auditor for theCompany since 1996. Johan Baeckström, born in 1954, Certified Public Accountant,KPMG. Auditor for the Company since 2001.

68

Björn Algkvist

President and Chief Executive Officer

Håkan Gyrulf

Vice President and

Chief Financial Officer

Franck Cohen

Sales Director and Head of

Business Group Southern Europe

Stephen Frobisher

Service Director

Claes Bille

Director of Human Resources

Markus Jakobson

Head of Business Group

Northern Europe

Jan Nilsson


Central Europe

Wim Jansen


Northwestern Europe

David Hope


Asia

Johan Berg

President of

Intentia Research & Development

Malin Laudon

Director of IT and Process

Development

Linus Parker


Americas

Steve Ironside


Australia/New Zealand

Lars Prochéus

Chief Operating Officer

69

Group ManagementBjörn Algkvist, born in 1959, President and Chief Executive Officer. Employed by theCompany since 1984. Holding in Intentia International: 2,864,700 Series A and3,681,235 Series B shares.

Håkan Gyrulf, born in 1950,Vice President and Chief Financial Officer. Employed bythe Company since 1996. Holding in Intentia International: 2,352 Series B shares.

Lars Prochéus, born in 1950, Chief Operating Officer. Employed by the Companysince 1999. Holding in Intentia International: 24,000 Series B shares.

Johan Berg, born in 1959, President of Intentia Research & Development AB.Employed by the Company since 1992. Holding in Intentia International: –

Franck Cohen, born in 1960, Sales Director and Head of Business Group SouthernEurope. Employed by the Company since 1995. Holding in Intentia International:4,474 Series B shares.

Stephen Frobisher, born in 1960, Service Director. Employed by the Company since2000. Holding in Intentia International: 48,600 Series B shares.

Claes Bille, born in 1953, Director of Human Resources. Employed by the Companysince 1995. Holding in Intentia International: 13,500 Series B shares.

Malin Laudon, born in 1973, Director of IT and Process Development. Employed bythe Company since 1998. Holding in Intentia International: –

Markus Jakobson, born in 1956. Head of Business Group Northern Europe.Employed by the Company since 1990. Holding in Intentia International: 260,000Series B shares.

Jan Nilsson, born in 1946. Head of Business Group Central Europe. Employed by theCompany since 1992. Holding in Intentia International: 11,700 Series B shares.

Wim Jansen, born in 1959. Head of Business Group Northwestern Europe.Employed by the Company since 2000. Holding in Intentia International: 20,000Series B shares.

Linus Parker, born in 1954. Head of Business Group Americas. Employed by theCompany since 1998. Holding in Intentia International: 750 Series B shares.

David Hope, born in 1966. Head of Business Group Asia. Employed by the Companysince 2001. Holding in Intentia International: 19,760 Series B shares.

Steve Ironside, born in 1954. Head of Business Group Australia/New Zealand.Employed by the Company since 1997. Holding in Intentia International: 300,000Series B shares.


70

YEARLY SUMMARYIncome Statement GroupAmounts in SEK million EUR million USD million

2003 2002 2001 2003 2002 2001 2003 2002 2001

License revenue 882.6 1,056.7 1,201.3 96.7 115.7 131.6 108.0 129.3 146.9Consulting revenue 2,005.9 2,539.3 2,756.1 219.7 278.1 301.8 245.4 310.5 337.2Other revenue 39.6 52.9 55.7 4.3 5.8 6.1 4.8 6.5 6.8

Net revenue 2,928.1 3,648.9 4,013.1 320.7 399.6 439.5 358.2 446.3 490.9

Consulting cost –1,791.9 –2,098.7 –2,298.1 –196.3 –229.9 –251.7 –219.2 –256.6 –281.1Cost for license –62.8 –84.3 –121.6 –6.9 –9.2 –13.3 –7.7 –10.3 –14.9Cost for other revenues –26.7 –31.5 –64.8 –2.9 –3.4 –7.1 –3.3 –3.9 –7.9

Gross earnings 1,046.7 1,434.4 1,528.6 114.6 157.1 167.4 128.0 175.5 187.0

Other operating items net 29.5 32.7 31.1 3.2 3.6 3.4 3.6 4.0 3.8

Product development expenses –282.7 –388.3 –327.0 –31.0 –42.5 –35.8 –34.6 –47.5 –40.0Sales and marketing expenses –754.1 –912.6 –888.4 –82.5 –100.0 –97.2 –92.2 –111.7 –108.7Administration expenses –277.0 –273.2 –244.3 –30.3 –29.9 –26.8 –33.9 –33.4 –29.9

Operating earnings –237.6 –107.0 100.0 –26.0 –11.7 11.0 –29.1 –13.1 12.2

Financial income and expenses 50.2 –41.5 –125.5 5.5 –4.6 –13.7 6.2 –5.0 –15.3Participation in associated companies’ earnings –3.4 –2.2 0.4 –0.4 –0.2 0.0 –0.4 –0.3 0.0

Earnings after financial items –190.8 –150.7 –25.1 –20.9 –16.5 –2.7 –23.3 –18.4 –3.3

Earnings before tax –190.8 –150.7 –25.1 –20.9 –16.5 –2.7 –23.3 –18.4 –3.1

Tax on profit/loss for the year –228.3 6.2 –26.1 –25.0 0.7 –2.9 –28.0 0.7 –3.2Minority interest in year's earnings 8.0 1.0 –5.3 0.9 0.1 –0.6 1.0 0.1 –0.6

Profit/loss for the year –411.1 –143.5 –56.5 –45.0 –15.7 –6.2 –50.3 –17.6 –6.9

Balance Sheet GroupAmounts in SEK million EUR million USD million

12-31-03 12-31-02 12-31-01 12-31-03 12-31-02 12-31-01 12-31-03 12-31-02 12-31-01

Intangible fixed assets 605.1 598.3 517.5 66.5 65.8 56.9 83.2 82.2 71.1Tangible fixed assets 164.4 222.5 257.0 18.1 24.5 28.3 22.6 30.6 35.3Financial fixed assets 298.4 559.0 519.2 32.8 61.4 57.1 41.0 76.8 71.4

Total fixed assets 1,067.9 1,379.8 1,293.7 117.4 151.7 142.3 146.8 189.6 177.8

Accounts receivable 870.1 1,116.7 1,376.1 95.7 122.8 151.3 119.6 153.5 189.2Other current assets 285.5 515.4 552.4 31.4 56.7 60.7 39.3 70.8 75.9Cash and bank balances 294.1 402.8 644.4 32.3 44.3 70.9 40.4 55.4 88.6

Total current assets 1,449.7 2,034.9 2,572.9 159.4 223.8 282.9 199.3 279.7 353.7

Total assets 2,517.6 3,414.7 3,866.6 276.8 375.5 425.2 346.1 469.3 531.5

Stockholders’ equity 831.6 779.4 850.3 91.4 85.7 93.5 114.3 107.1 116.9Minority interests 9.8 20.1 19.9 1.1 2.2 2.2 1.3 2.8 2.7Provisions 36.5 49.6 43.9 4.0 5.5 4.8 5.0 6.8 6.0Convertible notes 71.1 551.6 565.1 7.8 60.7 62.1 9.8 75.8 77.7Interest bearing long-term liabilities 46.3 64.0 59.6 5.1 7.0 6.6 6.4 8.8 8.2Other long-term liabilities 0.0 9.8 29.9 0.0 1.1 3.3 0.0 1.3 4.2Interest bearing current liabilities 189.7 312.0 369.1 20.9 34.3 40.6 26.1 42.9 50.7Other current liabilities 1,332.6 1,628.2 1,928.8 146.5 179.0 212.1 183.2 223.8 265.1

Total stockholders’ equity, provisions and liabilities 2,517.6 3,414.7 3,866.6 276.8 375.5 425.2 346.1 469.3 531.5

Cash Flow GroupAmounts in SEK million EUR million USD million

2003 2002 2001 2003 2002 2001 2003 2002 2001

Cash flow before change in working capital –37.8 80.8 49.6 –4.1 8.8 5.4 –4.6 9.9 6.1Change in working capital 200.7 4.9 272.2 22.0 0.6 29.8 24.6 0.6 33.3Cash flow from operations 162.9 85.7 321.8 17.9 9.4 35.2 20.0 10.5 39.4

Cash flow from investments –173.8 –265.2 –269.5 –19.0 –29.0 –29.5 –21.3 –32.4 –33.0

Cash flow after investing activities –10.9 –179.5 52.3 –1.1 –19.6 5.7 –1.3 –21.9 6.4

Cash flow from financing –96.3 –58.6 175.7 –10.5 –6.4 19.2 –11.8 –7.2 21.5

Cash flow for the year –107.2 –238.1 228.0 –11.6 –26.0 24.9 –13.1 –29.1 27.9

Liquid funds, opening balance 402.8 644.4 401.0 44.1 70.6 43.9 49.3 78.8 49.1Exchange rate difference in liquid funds –1.5 –3.5 15.4 –0.2 –0.4 1.7 –0.2 0.4 1.9Liquid funds, closing balance 294.1 402.8 644.4 32.3 44.2 70.5 36.0 50.1 78.9

The numbers presented above in EUR and USD reflect a direct conversion to EUR and USD of the accounts presented in the Company’s annual report and therefore do not reflect what the Company’s income state-ment and balance sheet would have been if they had been consolidated in the respective currencies. Therefore, this document should be regarded as a guide for the convenience of the reader and always be read inconjunction with the Company’s annual report.All years have been converted using the same exchange rate to safeguard that the growth rate and other rate analyses based on figures in this table correspond withthose presented in the annual report.The income statement has been converted using the average rate for the year, while all items in the balance sheet, with the exception of the profit/loss for the year, have beenreconverted using the closing exchange rate at year-end.Any conversion differences in the balance sheet have been booked against equity and presented under the heading “Cash flow from financing” in the cash flowanalysis.The average exchange rates were SEK-to-EUR=9.1317 and SEK-to-USD=8.1751. Closing exchange rates were SEK-to-EUR=9.0940 and SEK-to-USD=7.2750.


71

YEARLY SUMMARY BY QUARTERIncome Statement Group

Amounts in SEK million Q4 ’03 Q3 ’03 Q2 ’03 Q1 ’03 Q4 ’02 Q3 ’02 Q2 ’02 Q1 ’02 Q4 ’01 Q3 ’01 Q2 ’01 Q1 ’01

License revenue 288.4 181.0 206.2 207.0 316.0 222.8 307.3 210.6 443.1 246.2 274.0 238.0Consulting revenue 496.2 403.1 561.7 544.9 677.0 523.8 665.4 673.1 834.2 608.4 688.5 625.0Other revenue 11.5 16.4 3.5 8.2 3.9 11.7 18.1 19.2 0.1 24.0 15.4 16.3

Net revenue 796.1 600.5 771.4 760.1 996.9 758.3 990.8 902.9 1,277.4 878.6 977.9 879.3

Consulting cost –447.5 –392.4 –473.6 –478.4 –547.8 –442.6 –559.2 –549.1 –681.2 –519.0 –575.4 –522.5Cost for license –13.4 –18.6 –8.3 –22.4 –35.7 –30.2 –13.0 –5.4 –52.4 –32.0 –9.8 –27.3Cost for other revenues –8.7 –0.2 –14.3 –3.5 1.1 –10.4 –9.2 –13.0 –30.1 –6.7 –17.0 –11.1

Gross earnings 326.5 189.3 275.2 255.8 414.5 275.1 409.4 335.4 513.7 320.9 375.7 318.4

Other operating items net 11.7 5.3 6.2 6.3 11.6 6.1 9.0 6.0 12.1 8.1 7.5 3.5

Product development expenses –81.4 –57.8 –71.1 –72.4 –113.3 –81.3 –102.0 –91.7 –87.0 –68.6 –82.9 –88.4Sales and marketing expenses –215.0 –153.8 –175.8 –209.5 –236.0 –214.7 –247.5 –214.4 –261.3 –205.0 –230.5 –191.8Administration expenses –69.9 –65.2 –74.5 –67.4 –79.6 –62.4 –63.1 –68.1 –71.1 –53.0 –62.7 –57.6

Operating earnings –28.1 –82.2 –40.0 –87.2 –2.8 –77.2 5.8 –32.8 106.4 2.4 7.1 –15.9

Financial income and expenses –15.5 93.1 –8.8 –18.6 –7.3 –14.4 –18.4 –1.4 29.6 –79.9 –40.8 –34.4Participation in associated companies’ earnings –3.8 –0.1 0.3 0.1 –1.4 –0.4 –0.1 –0.3 –0.3 0.4 – 0.2

Earnings after financial items –47.4 10.8 –48.5 –105.7 –11.5 –92.0 –12.7 –34.5 135.7 –77.1 –33.7 –50.1

Earnings before tax –47.4 10.8 –48.5 –105.7 –11.5 –92.0 –12.7 –34.5 135.7 –77.1 –33.7 –50.1

Tax on profit/loss for the period –116.1 –84.5 –15.6 –12.0 5.2 –1.5 7.3 –4.8 –46.8 –13.8 25.1 9.4Minority interest in profit/loss for the period 5.0 –0.2 1.5 1.7 0.6 1.0 –0.7 0.1 –1.8 –0.7 –1.0 –1.7

Profit/loss for the period –158.5 –73.9 –62.6 –116.0 –5.7 –92.5 –6.1 –39.2 87.1 –91.6 –9.6 –42.4

Balance Sheet GroupAmounts in SEK million Q4 ’03 Q3 ’03 Q2 ’03 Q1 ’03 Q4 ’02 Q3 ’02 Q2 ’02 Q1 ’02 Q4 ’01 Q3 ’01 Q2 ’01 Q1 ’01

Capitalized expenditure for product development 342.9 323.6 296.9 278.8 249.6 221.0 195.3 165.3 134.7 101.2 76.6 42.3

Goodwill 262.2 292.0 314.0 332.8 348.7 364.7 380.2 417.9 382.8 393.5 375.5 339.0Tangible assets 164.4 177.7 192.4 209.6 222.5 242.7 246.1 254.2 257.0 253.6 254.7 251.8Financial assets 298.4 413.0 536.7 552.2 559.0 528.0 549.5 525.9 519.2 452.6 480.1 423.9

Total fixed assets 1,067.9 1,206.3 1,340.0 1,373.4 1,379.8 1,356.4 1,371.1 1,363.3 1,293.7 1,200.9 1,186.9 1,057.0

Accounts receivable 870.1 641.1 812.7 801.0 1,115.4 721.5 847.0 1,105.7 1,374.0 1,135.3 1,042.6 1,148.9Other current receivables 285.5 398.8 438.1 497.5 516.7 672.7 666.0 553.2 554.5 782.2 749.6 559.5Cash and bank balances 294.1 331.6 361.5 510.0 402.8 369.4 480.7 310.4 644.4 280.3 448.0 622.2

Total current assets 1,449.7 1,371.5 1,612.3 1,808.5 2,034.9 1,763.6 1,993.7 1,969.3 2,572.9 2,197.8 2,240.5 2,330.6

Total assets 2,517.6 2,577.8 2,952.3 3,181.9 3,414.7 3,120.0 3,364.8 3,332.6 3,866.6 3,398.7 3,427.4 3,387.6

Stockholders’ equity 831.6 968.6 642.8 690.2 779.4 781.2 867.8 849.3 850.3 417.3 450.7 467.9Minority interests 9.8 14.6 14.8 17.0 20.1 20.4 21.2 19.6 19.9 18.3 16.9 15.6Provisions 36.5 31.4 44.3 56.0 49.6 28.8 544.9 42.5 43.9 23.2 20.8 1.3Convertible notes 71.1 69.7 549.8 553.8 551.6 547.7 53.2 541.7 565.1 974.1 918.0 915.5Interest bearing long-term liabilities 46.3 51.9 56.7 60.6 64.0 64.4 63.2 61.2 59.6 61.5 65.6 61.9Other long-term liabilities 0.0 0.0 0.0 0.0 9.8 14.4 11.6 35.6 29.9 6.6 6.6 7.4Interest bearing current liabilities 189.7 264.0 267.7 332.2 312.0 218.8 257.8 225.6 369.1 270.5 263.1 416.1Other current liabilities 1,332.6 1,177.6 1,376.2 1,472.1 1,628.2 1,444.3 1,545.1 1,557.1 1,928.8 1,627.2 1,685.7 1,501.9

Total stockholders’ equity,and liabilities 2,517.6 2,577.8 2,952.3 3,181.9 3,414.7 3,120.0 3,364.8 3,332.6 3,866.6 3,398.7 3,427.4 3,387.6

Cash Flow GroupAmounts in SEK million Q4 ’03 Q3 ’03 Q2 ’03 Q1 ’03 Q4 ’02 Q3 ’02 Q2 ’02 Q1 ’02 Q4 ’01 Q3 ’01 Q2 ’01 Q1 ’01

Cash flow from operations before change in working capital 97.3 –91.1 1.3 –45.3 90.3 –55.8 68.7 –22.4 34.8 41.9 3.4 –30.5

Change in working capital –3.3 48.9 –44.8 199.9 –93.3 63.7 137.6 –103.1 336.3 –195.8 61.8 69.9Cash flow from operations 94.0 –42.2 –43.5 154.6 –3.0 7.9 206.3 –125.5 371.1 –153.9 65.2 39.4

Cash flow from investing activities –52.8 –42.4 –31.6 –47.0 –47.7 –52.3 –56.6 –108.6 –68.4 –59.7 –90.4 –51.0

Cash flow after investing activities 41.2 –84.6 –75.1 107.6 –50.7 –44.4 149.7 –234.1 302.7 –213.6 –25.2 –11.6

Cash flow from financing activities –79.8 56.6 –78.7 5.6 84.4 –44.7 20.5 –118.8 65.2 33.9 –151.6 228.3

Cash flow for the period –38.6 –28.0 –153.8 113.2 33.7 –89.1 170.2 –352.9 367.9 –179.7 –176.8 216.7

Liquid funds, opening balance 331.6 361.5 510.0 402.8 369.4 480.7 310.4 644.4 280.3 448.0 622.2 401.0Translation difference in liquid funds 1.1 –1.9 5.3 –6.0 –0.3 –22.2 0.1 18.9 –3.8 12.0 2.7 4.5Liquid funds, closing balance 294.1 331.6 361.5 510.0 402.8 369.4 480.7 310.4 644.4 280.3 448.0 622.2

72

Colophon

Illustrations and photographs: Alexander Fredés

Design and production: Alexander Fredés and Patrik Persson

Text: Zemi Communications, New York

Intentia Finance, Stockholm

Translation: Åsa Pape, Ken Schubert

Printed by Edita Sverige AB

Date post:	08-Mar-2018
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