Scala Continues Profitability with 33% Year-on-Year Increase in Net Income in Q3 2002

New license contracts such as latest $2.2 million deal help ensure 8th successive profitable quarter

21 October 2002: Scala Business Solutions maintained its goal of consistent profitability every quarter with its eighth successive profitable EBITDA quarter -- and net income for the seventh successive quarter -- for the period ending 30 September 2002.

 $0.04 earnings per share -- up 33% on Q3 2001
 $801,000 net income -- up 33% on Q3 2001
 $18.4 million cash balance -- up 142% on Q3 2001
 $18.1 million total revenue -- up 9.5% on Q3 2001

The Collaborative ERP vendor reported combined license and maintenance revenue was up 12.3% on the same quarter last year, with license sales almost level at $5.8 million, just 0.6% under Q3 2001. License deals increased on Q2 this year, with sales up 9.4%, resulting from closing outstanding deals from Q2 as well as new sales coming in through the pipeline. Maintenance revenue continued to show strong growth, increasing by 24% to $7.9 million compared to Q3 2001. Consulting revenue remained the same at $4.2 million, reflecting the programme implemented last year to level out consulting and grow this as a service supplied primarily by the companys partners. As such, the global partner network has developed from 108 in January 2002 to 142 in October -- a 31% increase.

The sustained levels of sales show that companies are taking action with their decisions to revamp their IT systems, gearing up their operations for online business," said Mike Burdett, Scalas Chief Executive Officer. We built the iScala® Collaborative ERP product line specifically for collaborative commerce. We are extremely pleased to announce that, by the end of the third quarter, the number of global companies using iScala software and evolving their business strategy has risen to nearly 60. Our decision to move to Collaborative ERP is proving to be the right one, time and time again."

Sales of iScala software further boosted cash balances, which have risen 142% to $18.4 million, up from $7.6 million for the same period last year, allowing the company to make an early repayment in October of the $6.1 million including interest Great Plains loan. Receivables management was also strong with days sales outstanding falling again, to 45 days, at the end of the third quarter 2002.

Acting Chief Financial Officer David Cairns said, Higher revenues and improving margins were partially offset by increased general and administrative costs of $800,000 over the Q3 2001 figure. To be prudent, provisions to cover potential one-off project costs were increased in the quarter; however, this does not affect underlying cost trends."

Q3 2002 Financial Highlights

Throughout 2002 Scala has focused on bringing its proven strategy for business to market, reinforced with the launch of iScala 2.1 -- the next-generation Collaborative ERP platform -- in May. Companies already using this new system have given extremely positive feedback and Scala has expanded its R&D staff by 20% to bring further iScala functionality to market more rapidly in order to meet the growing customer demand.

Outlook Towards Year End
Our customers tell us we are offering exactly the right products for standardising global operations at cost-effective levels, and we believe it is important to concentrate on further developing our collaborative technology," said Burdett. We have consistently said we would focus on achieving profitability every quarter, which is what we have done, and we remain positive that we will continue to do so. With our additional R&D investments in place, we expect to take full advantage of the opportunities 2003 will offer the IT industry."

Q3 2002 Business Highlights

Scala signs $2.2 million license deal for iScala 2.1: One of Scalas longest-standing global customers signed a new order to extend the companys current licenses to the complete functionality of iScala 2.1, the worlds first purpose-built Collaborative ERP platform commercially-released by Scala in May. In addition to the software license order, the company will purchase supplementary consulting services.

$1.1 million iScala 2.1 implementation deal signed with another global customer. The new contract with a leading global industrial company will be implemented in eight countries as part of their strategy to standardise ERP systems worldwide on SAP for their larger subsidiaries and Scala for their medium and smaller subsidiaries. In addition to iScala 2.1 software licenses worth $400,000, the customer has also purchased support and will purchase global project management services as part of the total project value of $1.1 million.

Barentz signs pan-European deal: In a competitive bid involving over 20 short-listed ERP companies, Scala was chosen as the only vendor who could offer coverage of all fifteen of Barentz sites across Europe. It was imperative to Barentz that they implemented just one system in all subsidiaries to bring about a global standard to enhance communication between Barentz and its business partners, as well as between Barentz subsidiaries.

Partnership with B*Mobile offers wireless barcode integration with iScala 2.1: Partnering with B*Mobile and their sister company B*Smart Intelligent Solutions takes Scala deeper into barcode data collection and business intelligence reporting -- exactly the kind of value-add products discrete manufacturing customers request.

Scala introduces new localised product for Brazil: Scalas latest localised system is designed to meet the specific needs of companies conducting business in Brazil supporting operations in Brazilian Portuguese and incorporates the countrys unique tax laws and accounting standards.

Choice Hotels International selects Scala Hospitality: Scala Hospitality is an endorsed IT supplier to US-based Choice Hotels. The group owns and franchises hotel properties under the Comfort Inn, Comfort Suites, Quality, Clarion, Sleep Inn, Econo Lodge, Rodeway Inn and MainStay Suites brand names in 46 countries.

Citibank partners with Scala: Partnership provides end-to-end corporate online banking solution. It will help streamline processes, manage costs, and increase profits for businesses using online banking, and is ready for immediate implementation in the Middle East, with plans to be deployed globally within the coming year.

First Russian implementation of iScala 2.1: Russian electronics retailer has invested in iScala 2.1 to provide real-time integration with their point of sale. This creation of a real-time link between the back office and what is really happening at the sales counter will give the company greater visibility and control of the business.

Scalas Baltic market share is double that of SAP: Analyst group, IDC, states that Scala has a 15% share of the enterprise application systems market across Estonia, Latvia and Lithuania -- almost double SAPs 8%. IDC also stated the market was set to grow by 14% year on year, giving Scala a healthy opportunity to gain further contracts in the area.

# # #

Notes to Editors

Forward looking statements
Management believes certain statements in this press release may constitute forward-looking statements with respect to the financial condition, results of operations and activities of Scala Business Solutions NV with respect to these items.
These forward-looking statements are based on currently available competitive, financial and economic data together with managements views and assumptions regarding future events and business performance as of time the statements are made. Actual results may differ materially from those expressed or implied in the forward-looking statements. Such differences may result from, but are not limited to, changes in the demand for business management and e-business products, competitive pressures, changes in the financial condition of the Companys major commercial customers and the Companys future ability to continue to develop and expand its product and service offerings to address emerging business demand and technological trends.

About Scala Business Solutions
Scala Business Solutions creates collaborative ERP software -- integrating Internet technology and traditional ERP functionality -- to make global business simple. With Scala, global companies can fully integrate all their ERP systems anywhere in the world, whether in a subsidiary, division or headquarters, and extending to their partners and suppliers. Scalas collaborative ERP software makes it possible for global companies to meet the requirements for advanced e-business as well as use a standard ERP product for managing traditional business processes. This enables them to gain measurable benefits from trading electronically, building a private exchange or global portal, or optimising the supply chain.
From offices in Europe, North America and the Far East, and through its network of partners and dealers, Scala delivers software and services that are available in over 30 languages in more than 140 countries.
Scala is listed on the Euronext Amsterdam Stock Exchange (symbol: SCALA). 2001 revenue was US$70.6 million (€79.1 million).
Visit Scalas website at www.scala.net for press information including press releases, information for investors, and company and product information.
© 2002 Scala Business Solutions, NV. All rights reserved. The Scala logo, Scala® and iScala® are registered trademarks. Other trademarks or registered trademarks are the property of their respective owners.

Other information available:
 Consolidated Statement of Operations (unaudited) -- in US dollars.
 Consolidated Statement of Operations (unaudited) -- in Euros.
 Consolidated Balance Sheets (unaudited) -- in US dollars.
 Consolidated Statements of Cash Flows (unaudited) -- in US dollars.
 Consolidated Statement of Shareholders Equity and Comprehensive Income (unaudited) -- in US dollars.
 Segmental Information (unaudited) -- in US dollars.