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Scala Maintains Strong Performance in Q1 2002 with 17% Increase in License and Maintenance Revenue

Added: (Mon Apr 22 2002)

Pressbox (Press Release) - Continuing profitability as Scala reports 6th consecutive quarter of operating income (EBITDA) and 5th consecutive quarter of net income.

22 April 2002: Collaborative ERP vendor Scala Business Solutions reports growth in combined software license and maintenance revenue of 17% and net income more than doubling for the quarter ending 31 March 2002 compared to the same quarter in 2001. The strong performance – at a time when many software companies are still reporting weak market demand – is underlined by a substantial increase in cash balances to over $18 million, up from more than $13 million at the end of the previous quarter, and a 138% increase over the first quarter last year.

“This robust first quarter 2002 performance is clear evidence that our business strategy continues to produce the positive results that build shareholder value,” says Mike Burdett, Scala’s Chief Executive Officer. “As the only mid-market vendor to provide a global Collaborative ERP solution to the medium- and small-size subsidiaries and divisions of global companies, our customers testify that our unique product profile is an excellent match to how they want to run their businesses.”

“Global companies will continue to invest in the business software they need if they can see a clear return on their investment”, continues Burdett, commenting on the company’s strong performance in the face of weak market conditions. “But they don’t have to spend a fortune on massive, complex systems when a smaller, and more flexible, software package can do exactly what they want, wherever they operate in the world, at a fraction of the cost.”

Scala’s Collaborative ERP systems combine standard ERP software with leading edge Internet connectivity. They offer global companies rock-solid, standard business software that can be easily implemented in any country in which they do business, at a cost lower than most alternatives. Scala software is currently available in more than 30 languages and is in use in more than 100 countries.

“We have been saying for a long time that global companies should take a two-tier approach to their ERP and e-business requirements, with a Tier 1 product such as SAP for their headquarters and larger subsidiaries, and Scala for their medium and smaller subsidiaries,” Burdett says. “Such an integrated and cost-effective approach will enable the realisation of collaborative and e-business projects throughout the enterprise, extending to their customers and partners. Without such top-to-bottom integration, the collaborative promise can never be fulfilled.”

Burdett says Scala’s first quarter results are in line with the company’s plan to build and sustain a solid rate of organic growth in 2002, maintaining net profitability in every quarter. “We expect market conditions to remain subdued throughout 2002,” he says. “By continuing to maintain tight control on operating costs and focusing on our clear business strategy of delivering the right products and services that our customers need, we will continue to make good progress this year while positioning ourselves to take full advantage of the expected market improvements in 2003. Our healthy liquidity, low cost level, and a growing customer base all provide further sound evidence that Scala is indeed on the move.”

Q1 2002 Business Highlights

Global electronics manufacturer Simtone rolls out Scala in China. Scala signed a new contract with the Spanish electronics manufacturer. Simtone will use the full range of Scala’s business process support software (including financial, logistics, manufacturing and human resources) in China as the company plans its expansion throughout South East Asia.

Hyatt Hotels centralises operations in India with Scala Hospitality. Within a centralised Scala ERP environment throughout its properties in India, Hyatt will acquire real-time access to each hotel’s financial data while improving resource allocation, management efficiency and overall bottom-line performance.

Scala awarded professional accreditation for its global customer support operation. Accreditation awarded by the UK-based Institute of IT Training for Scala’s highly-professional and well-managed support operation, evidencing its rigorous procedural and management controls and formal customer feedback processes.

Organisation streamlining in Europe for maximum business advantage. Scala merged its German and Nordic Region business units into a new Northern Europe Region, strengthened its senior management team in Central and Eastern Europe and formed a new partnership in Bulgaria, all designed to deliver improved levels of customer service and support.

Arca Systems use collaborative ERP as the backbone for collaboration. The European market leader for materials handling expands its use of Scala's full range of products to integrate its business processes in seven European countries.

CRAFTrise Holding implements Scala in Russia. Scala’s multinational and integration capabilities helped clinch the deal with this large Russian chocolate manufacturer. During its ten years of doing business in Russia, Scala has implemented more than 500 systems in Russia for both well-known international companies and large Russian companies.

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Notes to Editors

Forward-Looking Statements

Management believes certain statements in this press release may constitute forward-looking statements with respect to the financial condition, results of operations and activities of Scala Business Solutions NV with respect to these items. These forward-looking statements are based on currently available competitive, financial and economic data together with management’s views and assumptions regarding future events and business performance as of time the statements are made. Actual results may differ materially from those expressed or implied in the forward-looking statements. Such differences may result from, but are not limited to, changes in the demand for business management and e-business products, competitive pressures, changes in the financial condition of the Company’s major commercial customers and the Company’s future ability to continue to develop and expand its product and service offerings to address emerging business demand and technological trends.

About Scala Business Solutions

Scala Business Solutions creates collaborative ERP software – integrating Internet technology and traditional ERP functionality – to make global business simple. With Scala, global companies can fully integrate all their ERP systems anywhere in the world, whether in a subsidiary, division or headquarters, and extending to their partners and suppliers.

Scala’s collaborative ERP software makes it possible for global companies to meet the requirements for advanced e-business as well as use a standard ERP product for managing traditional business processes. This enables them to gain measurable benefits from trading electronically, building a private exchange or global portal, or optimising the supply chain.

From offices in Europe, North America and the Far East, and through its network of partners and dealers, Scala delivers software and services that are available in over 30 languages in more than 100 countries.

Scala is listed on the Euronext Amsterdam Stock Exchange (symbol: SCALA). 2001 revenue was USD 70.6 million.

Visit Scala’s website at www.scala.net for press information including press releases, information for investors, and company and product information.
© 2002 Scala Business Solutions, NV.

All rights reserved. Scala® is a registered trademark. Other trademarks or registered trademarks are the property of their respective owners.

Further information available:

Consolidated Statement of Operations (unaudited) – in US dollars.

Consolidated Statement of Operations (unaudited) – in Euros.

Consolidated Balance Sheets (unaudited) – in US dollars.

Consolidated Statements of Cash Flows (unaudited) – in US dollars.

Consolidated Statement of Shareholder’s Equity and Comprehensive Income – in US dollars.

Segmental Information (unaudited) – in US dollars.

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