Vision

Novabase is the leading Portuguese company in Information Technology (IT) business solutions and one of the European IT sector's fastest-growing companies in recent years.

Chairman's Message

At the start of 2008, Novabase had taken on the dual objective of focusing on its core business to maximize profitability and sustainability, and of closing its mobility solutions business.

However, the deepening global financial crisis gave rise to a third major objective: restructuring the Digital TV business. Since it was not possible to finance this business area through new shareholders, and with our German affiliate TechnoTrend's performance affected by a sharp drop in margins and a major decline in its retail business, Novabase decided to reposition itself in this area towards the role of an integrator.

As a result of these decisions, 2008 had a demanding and difficult agenda from the outset in the search for greater profitability and sustainability for the business, focused on the areas of consulting, infrastructures and outsourcing, together with the restructuring of the Digital TV area, the closing of the Mobility business and the restructuring of the Ticketing Solutions area which began in 2007.

We are pleased to report that we significantly strengthened the Novabase Consulting and Novabase IMS businesses compared to the previous year. According to IDC Portugal, for the first time in its history, Novabase is ranked first among all of Portugal's consulting companies and fifth in outsourcing services. Around 90% of the work to close the mobility business is complete, within the initially established provision limits of 8.8 M . We have repositioned ourselves in the TV business, having acquired 100% of the Portuguese companies in which we already had a stake, together with assets of TechnoTrend to own the intellectual capital it has developed in the set-top box business. These assets have been transferred to a new German company called Novabase Digital TV Technologies, GmbH.

Novabase Consulting grew 15.2% to 80 M€ with an EBITDA margin of 14.2%. This area's EBITDA margin was 16.2% last year. This difference is basically due to two reasons. The first was the dollar's downward trend against the euro, which affected margins in international projects. This alone caused a 1.1% percentage loss in EBITDA margin compared to the previous year. The second, which will be recurring, involves the need to cost new products and services, personnel training and other structural investments which must be done continuously to ensure this business' medium and long-term sustainability.

In turn, Novabase IMS (Infrastructures and Managed Services) grew 8.4% to 92 M€ with an EBITDA margin of 7.3% compared to 5.6% in the previous year. This area's challenge in 2008 was also the integration of different businesses, originally from the former Novabase IIS and Novabase Consulting, to combine all facets of outsourcing (infrastructures, applications management and closely related areas such as IT infrastructures and ticketing) under one roof.

In Digital TV, we still saw growth of 3.7% to 120.1 M despite the deconsolidation of TechnoTrend in the fourth quarter. The EBITDA margin fell to 2.5% for the reasons described above. TechnoTrend's sale of assets to a german industrial group at the start of 2009 will finance its closing. As a result, since we still had time to recognize
the write-off of our stake in TechnoTrend in the accounts, the respective figure of 0.7 M was recorded in the
2008 accounts.

Overall, Novabase's turnover was 292.0 M in 2008, 8.1% more than in 2007 (with the consolidation perimeter adjusted to reflect a comparable reality). Our EBITDA was 21.1 M€ 8.6% less than in 2007, primarily due to the Digital TV business' decline in profitability.

In addition to the results, 2008 was also an important year in Novabase's corporate life. Of particular note was the inauguration of our new head office at Parque das Nações, attended by the Prime Minister, various government officials and the Mayor of Lisbon. In 2008, Novabase also renewed its number-one ranking among the companies most compliant with CMVM recommendations on corporate governance. Two of our largest practices became certified according to the CMMI standard (level 3) for software development. We successfully launched our first project to develop an offshoring solution for a telecommunications operator in Kenya, and we prepared for our entry into Angola, among many other success stories.

We will embark on 2009 in the tide of a global crisis that will certainly impact every sector. The true impact on our business sector remains unknown. Nonetheless, we feel we are well-prepared. Novabase has no debts. We closed 2008 with positive net cash of 19.2 M€ including only 4.7 M in factoring. Our business portfolio underwent a broad restructuring in 2008, keeping the most profitable businesses, which are service-based, although often leveraged by products. Our team is solid, and our management is experienced in coping with challenging times, such as 2001-2003.

In 2009, we hope to capitalize on our new positioning in the Digital TV area and continue to strengthen other core areas, improving the Group’s organization, the specialization of our practices and developing new markets.

If crises truly affect everyone, it is also true that those who successfully resist them emerge much stronger. We are thus well positioned, once again, to persevere and win.

Rogério Carapuça
Chairman Novabase S.G.P.S.