Norman ASA had net revenues of NOK 55.0 million in the 1st quarter 2000, an increase of 25% compared with the 1st quarter 1999. In this period, the company had an operating profit of NOK 1.1 million and a profit before tax of NOK 1.9 million, both after a provision of NOK 0.9 million for future social taxes on share options. This is a clear improvement compared with the 1st quarter 1999 when there was an operating loss of NOK 4.9 million and a loss before tax of NOK 1.8 million. The increase in both net revenues and profitability is the result of Norman continuing to capture market share at the same time as costs are well under control. The increase in net revenue of 25% comprises an increase of 40% in the sale of Norman’s IT security products and an increase of 7% for Ibas equipment repair, data recovery and secure erasure products.

Part of the reason for the continuing good growth in Norman's security products and the improved operating result is the sustained growth in the virus control market. At the same time, Norman is continually increasing its market share of the global virus control market.

The increased interest in security products such as Norman Access Control has now resulted in agreements with the Swedish Police Force and the Landesversicherungsamt ("National Insurance Authority") in Germany. Both interest in the market and the prospect list has increased substantially compared with the same period in 1999.

Interest in the Ibas secure erasure product, ExpertEraser continues to be strong and revenues from this product group have increased during the course of the 1^st quarter.

The increase in costs during the period has been moderate and planned, and is linked to a controlled increase in R&D costs and variable sales costs associated with increased revenue. Operating costs also include an extra provision of NOK 0.9 million for social taxes arising on the future exercise of outstanding options.

Cash flow from operations was NOK 2.7 million, before working capital adjustments.

The key activities arising in the 1^st quarter 2000 were as follows:

1. Distribution agreements for Norman's security products were entered into with CS Software SRL in Romania and with MRAZELECTRONIC in Croatia. Furthermore, an extensive distribution agreement was signed with Getronics for the Norwegian market.
2. An OEM agreement was also signed with the Malta-based company, GFI Fax & Voice Ltd, where GFI will use Norman's virus scanner in its own e-mail security solution.
3. All sales subsidiaries have increased sales also this quarter compared to the same period in 1999. The revenue growth for Norman products in the US, Germany and Norway was 152%, 65% and 51% respectively, compared to the same period in 1999.
4. Norman has undetaken a redesign and relaunch of its web-site and content pages, which has been positively received. Each day there are an average of 2.000 visitors to the Norman web-site.
5. A new, component-based version of Norman's access control/encryption/VPN product was launched at the end of the 1^st quarter, in accordance with plan.

At the beginning of April, Norman ASA's fully owned subsidiary, Ibas AS, agreed to sell to Infocare ASA its equipment repairs business. With Ibas selling its repairs business, Norman ASA is now a pure vendor of products and services for data security. Norman's product areas are virus control, access control/encryption/VPN, risk management, recovery of lost data eg. as a result of virus attack, and the secure erasure of data, such as sensitive data.

During the last few days of attacks from the upto now fastest spreading and most destructive computer virus ever - LoveLetter -Norman has confirmed its position as one of the leading virus control companies in the world. It took 2 hours 11 minutes from the time when Norman first identified the virus until a new virus definition file was ready for download from our web server. In the meantime, 1 hour after the virus sample had been received and had been analysed such as to understand how serious this was, customers and partners were also warned about the the new virus. Norman was therefore one of the world's fastest IT security companies to identify the virus and was probably the first company to make a new definition file available, several hours ahead of our US-based competitors.

Norman's detection of viruses occurs by means of an "intelligent" routine which also identifies variants of the virus without requiring the downloading of new definition files, as compared to the situation with a number of our competitors.

We experienced upto 2,500 hits on our web-site per minute and an extreme pressure on our global support teams that worked round the clock to support our customers and inform via the media.

Ibas received more than 300 enquiries relating to the recovery of data during the course of 4^th and 5^th May. Among others, the company reconstructed over 17.000 picture files for Cell Networks, the consulting firm.

These virus attacks confirm once again that the speed of distribution and the destructiveness of computer viruses is continually increasing, and that there are only a handful of professional virus control software on the world market that can manage to counteract these developments in a satisfactory way for the professional market. Amongst the vendors, Norman is the only one able to offer data recovery as part of its service portfolio.

Data security has achieved an increasingly more central role in the IT focus of a variety of companies and organisations. This was underlined in a statement on the Norwegian Government's IT policy which was presented to the Norwegian Parliament this week by the Minister responsible for IT, and where the importance of a focused and broadly-based IT security policy featured highly. This confirms to us that data security issues will be prioritised by the public sector; an area where we have previously failed to see a more thought through data security strategy. Norman will take the initiative to make our knowledge and competence available to this work in the near future.

The board of directors and executive management are satisfied with the progress made in the 1^st quarter and will continue to focus on revenue growth with an operating profit.

Norman ASA Consolidated income statements

Analysis of net financial items

Analysis of research & development costs included in total operating expenses

Notes to the consolidated financial statements

1. Figures for 1998 have been restated and reclassified in accordance with the new Norwegian Accounting Law effective from 1^st January 1999. There were no material adjustments to the 1998 figures arising from the implementation of the new Norwegian Accounting Law.
2. Results from SHARK BV and ESaSS BV, Netherlands, and Norman Data Defense Systems AB, Sweden, have been consolidated from 1 March 1998, 1 April 1998 and 1 August 1998 respectively.

Norman ASA Consolidated balance sheets