Proffice: Interim report January-September 2012

Regulatory News:

Proffice (STO:PROEB) prepares for continued success

Q3 2012 compared year-on-year

· Revenue decreased 2 per cent to SEK 1,182 million (1,208)

· EBITA and operating profit declined 54 per cent to SEK 31 million (68)

· EBITA and operating margin stood at 2.6 per cent (5.6)

· In Sweden, which accounted for 76 per cent of consolidated revenue, Proffice’s revenue decreased 2 per cent to SEK 894 million (909). Operating profit totalled SEK 25 million (64), representing an operating margin of 2.8 per cent (7.0)

· Cash flows from operating activities totalled SEK 104 million (52), a positive trend mainly attributable to the measures taken regarding previous delays in invoicing · Basic earnings per share totalled SEK 0.28 (0.65)

January-September 2012 compared year-on-year

· Revenue increased 5 per cent to SEK 3,677 million (3,486)

· Other operating income totalled SEK 13 million (0) because the actual additional purchase price from previous acquisitions deviated from the expected outcome · EBITA and operating profit declined 23 per cent to SEK 124 million (163)

· EBITA and operating margin totalled 3.4 per cent (4.7); excluding other operating income, the corresponding margin totalled 3.0 per cent (4.7)

· In Sweden, which accounted for 76 per cent of consolidated sales, Proffice’s revenue increased 5.4 per cent to SEK 2,816 million (2,672). Operating profit totalled SEK 143 million (191), representing an operating margin of 5.1 per cent (7.1). Excluding other operating income, the operating margin was 4.7 per cent (7.1)

· Cash flows from operating activities totalled SEK -20 million (29) as an effect of the decrease in operating profit

· Basic earnings per share totalled SEK 1.16 (1.57)

After end of quarter

· Proffice sees a declining market and a tougher economic climate ahead. The company is reducing administration costs by SEK 250 million annually in order to quickly adapt operations to the prevailing situation. This will be implemented immediately and will impact earnings by SEK 30-50 million, mainly in Q4.

Financial overview

CEO comments

Proffice prepares for continued success After a positive start to the third quarter, our business was impacted late in the period by the macroeconomic situation of the last few months and the increased uncertainty in the market. Sales for the third quarter fell 2 per cent to SEK 1,183 million (1,208).

The decline in demand resulted in higher adjustment costs, primarily due to increased guaranteed wage expenses. The period was also encumbered by one less working day than the same period last year, along with increased direct and indirect costs related to the implementation of our Group-wide Enterprise Resource Planning (ERP) system. These expenses will also affect earnings in the fourth quarter.

Despite this, we managed to achieve an EBITA of SEK 31 (68) million for the quarter, which corresponds to an EBITA margin of 2.6 per cent (5.6), thanks to dedicated employees and a clear specialisation strategy.

Following a temporary period of slightly encumbered liquidity, primarily attributable to implementation of our new ERP system, our situation has now stabilised. Concrete actions and more aligned processes over the period resulted in good cash flows and a considerably improved cash position. We continue to work on this and to review our tied-up working capital.

Action plan We find ourselves in a situation where demand is declining. Leading indicators for the Swedish economy and the Swedish labour market clearly point downward and show signs of a weaker labour market in 2013. Success now depends on how quickly and decisively we act to adapt operations to the current economic situation. A vigorous action plan has been initiated in which cost savings and increased sales activities are central measures. Annual administration costs will be reduced by SEK 250 million, which will mainly encumber earnings in the fourth quarter. Costs for the action plan are estimated to SEK 30-50 million. In parallel, Proffice will increase pressure on the market and double the number of customer visits through cumulative actions and the reallocation of internal resources.

Sweden: Stable sales despite economic slowdown At the end of the third quarter, there was a clear slowdown in the Swedish labour market, which was confirmed by the Swedish Public Employment Service’s report on a near doubling of the number of notices given during September. Sales for the quarter fell 2 per cent to SEK 894 million, compared with a record strong third quarter last year.

We have faced great challenges in the implementation of our ERP system and it will take longer than expected. We estimate that implementation will continue into 2013.

The EBITA margin for the quarter of 2.8 per cent (7.0) was also impacted by increased price pressure in the market, driven by lower demand, and by higher adjustment costs.

In the third quarter, we signed several important agreements, including one with Swerock for delivering logistics services in the mining industry and one acting as the lead supplier to the Swedish Public Employment Service. After the end of the quarter Proffice became PostNord’s first choice for recruitment.

Norway: Increased growth and specialisation In Norway, the labour market is still favourable and the registered unemployment rate is now at its lowest level in three years. Our Norwegian business continued to grow, primarily in Industry/Logistics, and represents a balancing force for the Group with stable economic performance. Sales for the third quarter climbed 2 per cent to SEK 271 million (265).

Our growth ambitions in Norway continue. In the third quarter, we continued to cultivate our initiatives in the Finance business area and started up another specialist company called Dfind Engineering for the staffing and recruitment of engineers. These initiatives affected the quarter’s EBITA margin by 3.3 per cent (6.0).

During the third quarter we signed and elaborated on several important agreements, primarily in the areas of Industry/Logistics and Office/Customer Service.

Finland Macroeconomic instability is having a harsh effect on Finland and growth continued to slow in the second half. This continued to influence our operations, and sales fell to SEK 14 million (28). However, in the long term we see great potential for our services in the Finnish market, so we will continue to explore possible acquisitions and to have a positive outlook for expanding our operations in Finland.

New initiatives and speedy adjustments Our customers’ needs for quick adaptation and the right competence drive our business forward. By constantly creating innovative new services and offers we increase our customers’ competitiveness and improve their ability to deal with opportunities and challenges.

Over the period we have taken important steps to promote long-term growth. One successful initiative is our efforts in the mining industry, a highly expansive market. Our task is to find the right competence for hundreds of job opportunities in the region surrounding the ore fields. Our focus on Dfind Engineering will meet the strong demand for engineers in the Nordic market.

Proffice aims to be the most successful staffing company in the Nordic region. The weakened economy we now face requires that we quickly adjust our strengths and adapt our operations. We also continue to invest in shared processes and EPR systems in order to prompt efficiency and economies of scale.

By combining a powerful action plan with innovative offerings and dedicated employees, we will ensure continued profitability and growth.

Lars Kry President and CEO Proffice AB

Information in this interim report is such that Proffice AB (publ) is obligated to disclose it pursuant to the Swedish Securities Markets Act. The information was released for publication on 21 November at 8 am CET.

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