Telindus Group reports positive operating results

6 August 2003 Heverlee, Belgium Lightwave Europe-- In the first six months of 2003, Telindus, the Belgian-based European specialist in data and telecommunication networks, reported operating income of EUR 278 million, up 2% on the first half of 2002.

Aug 6th, 2003

6 August 2003 Heverlee, Belgium-- In the first six months of 2003, Telindus, the Belgian-based European specialist in data and telecommunication networks, reported operating income of EUR 278 million, up 2% on the first half of 2002.

The operating result for the first half of 2003 is slightly positive, at EUR 0.4 million, compared with a loss of EUR 7.7 million for the comparable period last year.

Despite difficult market circumstances, Telindus is ending the second six-month period in a row with a positive operating result. The EBITDA margin rose to 5% in the first half of the year, compared with an EBITDA margin of 1.2% for the same period last year.

Product sales in the first half of 2003 amounted to EUR 187 million. This represents a fall of 1% compared with the comparable period in 2002 (EUR 188 million), despite a substantially weaker US dollar. The company estimates that setting aside the weakening of the US dollar, product sales would have risen by 6% compared with the first half of 2002.

Sales of network-related services rose by 15% to EUR 88 million in the first six months of 2003, compared with the first half of 2002. This increase is further confirmation that our strategic focus on services is yielding benefits.

The partial write-back of amounts written off, which were previously booked on own shares that Telindus held in its portfolio, had a positive impact on the net result. Following an increase in the price of Telindus shares in the first half of 2003, a positive financial result of EUR 4.6 million can be booked on these shares.

Operating revenues rose to EUR 278 million (up 2% compared with the first half of 2002). The proportion of the turnover accounted for by services rose further by 15% compared with the same period last year, amounting to 32% of the total turnover. Product sales fell by 1% to EUR 187 million, primarily due to the weakening of the rate of the US dollar.

Thanks to this increase in turnover, mainly in services, and thanks to the positive effects of the restructuring plan undertaken during 2002 and at the start of 2003, the operating result recorded in the first half of 2002 (EUR -7.7 million) improved to reach a positive figure of EUR 0.4 million, an increase of EUR 8.1 million.

Comparing Telindus' business between 2003 and 2002 the following revenue changes were observed. Service business increased to 32% (29%) while product sales slipped slightly to 68% (71%). Changes in geographic breakdown were: Benelux 41% (48%); Europe's "Big 5" 46% (43%); Rest of the World 13% (9%).

In the Benelux region, a reduction in investments in the financial sector and among operators has led to a 14% fall in turnover. However, the share of services continued to increase in the Benelux. Services have increased by 11% compared with the same period last year and account for 41% of the turnover.

A positive result was recorded in France, Spain and Portugal, and in the United Kingdom, in line with expectations. In Germany, Italy and Switzerland, the first half of the year witnessed continued downward pressure on product sales, which meant that the results were lower than expected. The results in these countries were still negative and further measures have been taken here and in a number of smaller countries to restore operational profitability.

Turnover in China rose substantially, both in product sales as in
services.

In the first half of 2003 Telindus generated a positive cash flow of EUR 14.0 million, as against a negative cash flow of EUR 2.2 million in the comparable period the previous year. The net cash position as at 30 June 2003 amounted to EUR 60.0 million (EUR 1.51 per share), compared with a net cash position of EUR 60.3 million as at 31 December 2002 (EUR 1.49 per share).

Despite the investment in new offices in Ostend and Haasrode amounting to a total of EUR 11.5 million for the first six months, Telindus has succeeded in ending with virtually the same net cash position as at the beginning of the year. This is the result, amongst other things, of the strict control of the working capital.
A further sum of EUR 8 million in investments in new buildings is planned for the second half of the year.

At the end of 2002 Telindus had 1,443,488 of its own shares in its
portfolio. In the first quarter of 2003, Telindus purchased a further
192,515 of its own shares net, at an average price of EUR 4.1.
As has already been indicated, at the general shareholders' meeting held on 23 June 2003 it was decided to annul 700,000 of the own shares in the portfolio, bringing the total of outstanding shares down to 39,736,930 (from 40,436,930).

As at 30 June 2003, Telindus consequently still owned 936,003 of its own shares, valued at the final rate at the end of June, that is EUR 6.95.

In addition to its network activity, Telindus also owns a number of financial shareholdings, amongst others in Mobistar (4.7%), Spearhead (6.8%) and Netfund Europe (5.6%). On the basis of the rate as at 31 July 2003 (EUR 37.20) the shareholding in Mobistar bears an unexpressed surplus value of EUR 92,6 million (EUR 2.33 per Telindus share).

Outlook for second half of 2003
On 27 June 2003, a five-year framework agreement was signed between the Flemish government and the EDS-Telindus consortium in Belgium for the supply of ICT services to the Flemish government.

The contract includes an extensive range of ICT services, the absolute value of which may fluctuate depe nding on the volume of services purchased over the five-year period. On the basis of the existing annual purchase levels, the Flemish Community is estimating a representative amount of EUR 449 million for this period. Telindus' share in this contract is estimated at approximately 15%.

Telindus' focus on network services and the recent investments in a centre for remote network and protection services (International Service Center) no doubt lay behind the choice made by the Flemish Community.

This also illustrates the opportunities open to Telindus as a service provider for other outsourcing contracts, in conjunction with a partner such as EDS. The 15% growth in the proportion of services in the turnover shows that Telindus is continuing to establish a position as a provider of network services.

The company says that forecasting is a "hazardous undertaking" in these difficult and uncertain market conditions. Nevertheless, Telindus says it is counting on being able to record another positive result in the second half of the year, thanks to its continued focus on services.

Telindus Group
Telindus Group is the Belgian-based European expert in data and
telecommunication networks. The company's expertise covers a wide range of areas in the field of modern telecommunications technology, including LAN, WAN, Internet and E-business, network access and security, VOIP, VPN, fixed and mobile communication.

Founded in 1969, the Telindus Group currently employs around 2,200 people in around 60 establishments spanning 16 countries. It also maintains an extensive network of agents in the rest of Europe and on other continents.

It has a wide-ranging customer base and can provide both regional and pan-European references in virtually every industrial sector.
Telindus Group is listed on Euronext Brussels.

For more information visit www.telindus.com

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