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FreeSoft on the first anniversary of becoming public

FreeSoft has delivered on its promises to its shareholders in the first year after its IPO, the company performed acquisitions in Hungary, and founded an additional subsidiary abroad, while also extended its portfolio, thus becoming a Hungary-based multinational market player with comprehensive solutions comprising custom applications, products and services.

September 25, 2005, Budapest, Hungary. On the first anniversary of its IPO, FreeSoft's executive team is proud of the fact that the share's exchange rate never went below the HUF 1,800 initial price, and since the acquisitions performed early this year it has always been above HUF 2,000.

"In the past year, FreeSoft's shares traded at a solid volume," says Gábor Móricz, Financial Advisor, FreeSoft. "But acquisitions caused peaks in the trading, because the owners of the companies acquired by FreeSoft purchased larger share packets as part of these transactions."

As a response to market demand, the Budapest Stock Exchange introduced the possibility of forward trading of FreeSoft shares, which will hopefully make these securities, expressly considered as a 3-5-year investment, more attractive to institutional investors.

"FreeSoft would be able to realize a higher-rate expansion and product development against the profit of the corporation," says Vilmos Vaspál, Chairman, FreeSoft. "Investors would probably support this because of their long-term interests, but the Hungarian public procurement system disqualifies companies with a negative result from tenders. Therefore, to further increase the pace of development, and to keep public institutions and governmental organizations as our customers, FreeSoft's plans include an additional share subscription process. But it is likely to be an exclusive offer for professional investors."

In the year of its IPO, FreeSoft's revenue was over HUF 900 million; according to its brief reports for this year, the company will be able to achieve the 30 percent, above-market-average growth rate planned for this year.

Acquisitions and subsidiaries

At the time of its IPO in 2004, FreeSoft made two promises to its customers. One of the promises was related to the application migration technology developed by FreeSoft, for which significant demand is present in the developed international markets where there is an abundance of legacy IT systems ripe for modernization. The capital increase through the public subscription process was performed to finance this international market strategy. FreeSoft's other promise was to become the leader of the ongoing consolidation process in the Hungarian IT market, and as a public company, produce an above-average growth rate by expanding its technological and product portfolio through acquisitions.

Early in 2005, the acquisition of Axis Group, BIG FISH and MoolTech took place; as a result, Business Intelligence, Internet and mobile technologies were added to FreeSoft's portfolio.

At the same time, FreeSoft's international market presence also became stronger, because in addition to the Dusseldorf-based German subsidiary, FreeSoft Deutschland GmbH, this May FreeSoft International Ltd. was launched in the USA, in Vienna, Virginia. Both subsidiaries have already signed contracts worth hundreds of thousand dollars or euros: In Germany, the accounting system of the Lower-Saxonian Land Registry, in the USA, the IT system of one of the world's largest car rental group will be modernized by FreeSoft.

In the first year after the IPO, FreeSoft delivered on both promises, and is now looking at the opportunities of further acquisitions, subsidiaries and partnerships to expand domestically and internationally.

Portfolio expansion

Together with the acquisitions and the foundation of subsidiaries, FreeSoft's portfolio was also expanded: in addition to custom development, the company's traditional activity, packaged products and services were added to the range of offerings. At the end of September, FreeSoft announced the launch of an electronic customs management system as a managed service on January 1, 2006, based on an agreement with Irish Icarus; this new plan by nature will provide a continuous, predictable influx of revenue.

In October 2005, FreeSoft will introduce five packaged products under the BIG FISH brand. They are based on the mobile and web technologies of two of the acquired companies, BIG FISH and MoolTech; select products will also be available as services. With the introduction of the BIG FISH range, FreeSoft will enter another market segment.

At the same time, as a response to market demands, FreeSoft is also launching Contentum, an integrated modular solution based on its proven KIR Governmental Records Management System, which complies with all EU and domestic records management recommendations, standards and regulations. "The core of the system is KIR, originally developed for governmental organizations, extended with four additional modules to meet the needs of business organizations," says Ibolya Domak, Marketing Director, FreeSoft.

Target markets

FreeSoft is currently working on major projects for governmental organizations. The company is building a portal system for the 34 local governments in the Marcali small region, and an IT infrastructure which will form the basis of future electronic case management. In Bátonyterenye, FreeSoft runs a data entry center, which has employed disadvantaged gypsy employees already for two years in this Nógrád-county town, where the unemployment rate is a multiple of the national average; the center has already performed high-volume document digitalization and archival tasks for different customers, including the Ministry for Information Technology and Telecommunications, the National Pension Fund and ÁB-Aegon.

In addition to its traditional governmental orientation, FreeSoft strives to achieve a stronger position also in the business sector. Besides international markets, the company is working on high-volume Hungarian projects for example for MÁV, the Hungarian National Railroads.The project involves the version upgrade of MÁV's ERP system, and the deployment of newly-formed MÁV Cargo Rt's Oracle-based integrated financial/accounting system; the value of the contract exceeds HUF 900 million, to be realized by 2008.

A multi-national software publisher headquartered in Budapest

"In addition to everything else, a very powerful organizational restructuring also took place at FreeSoft during the one year since the IPO. Few Hungarian companies have succeeded in becoming from a smaller medium-sized business a larger medium-sized business, a Hungary-based multinational company. In half a year, FreeSoft's headcount increased from 60 to 160, and seven divisions were established along FreeSoft's competences, for the areas of Custom Development, Application Migration, Document Management and Collaboration, Enterprise Resource Planning, Business Intelligence, Online (Internet and Mobile) Technologies and Services. For these divisions, we set up a central knowledge base to support the close cooperation between the divisions specialized for each area.s Leveraging these convergences, FreeSoft can deliver genuine comprehensive solutions comprising custom applications, products and services to its customers," says János Keresztesi, CEO, FreeSoft Rt.

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