Interim report January-September 2012

Proffice 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

                              Q3           YTD       Full year   Change
Group                     2012   2011   2012   2011       2011  quarter
Revenue, SEK million     1,182  1,208  3,677  3,486      4,770      -2%
EBITA, SEK million          31     68    124    163        227     -54%
EBITA margin, per cent     2.6    5.6    3.4    4.7        4.8        -
Operating profit, SEK       31     68    124    163        218     -54%
million
Operating margin, per      2.6    5.6    3.4    4.7        4.6        -
cent
Profit after tax, SEK       19     47     83    117        154     -60%
million
Basic earnings per        0.28   0.65   1.16   1.57       2.02     -57%
share, SEK
Diluted earnings per      0.28   0.65   1.16   1.57       2.02     -57%
share, SEK
Cash flows from            104     52    -20     29        128        -
operating activities,
SEK million
Basic equity per share,   7.44   9.86   7.44   9.86      10.27     -25%
SEK
Return on equity, per      3.2    7.0   14.0   18.2       22.0        -
cent


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

If you have questions about this interim report, please contact:
Lars Kry, President and CEO, telephone +46 8 787 17 00, lars.kry@proffice.com
Magnus Uvhagen, acting CFO, telephone +46 8 787 17 00,
magnus.uvhagen@proffice.com

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.