• Temporary Staffing and Recruitment turnover increased by 30 per cent
• Career and Development completes geographic expansion with 30 offices in Sweden

The Group net turnover for the first quarter 2006 was MSEK 655 (556). The increased turnover is primarily due to increased sales within the activity area Temporary Staffing and Recruitment in Sweden and Norway. The Group operating profit was MSEK -4 (19). A severance pay of MSEK 4 for changes of personnel in Sweden and Denmark, as earlier communicated, is included in the Group operating profit. Adjusted for this cost, the operating profit for the first quarter 2006 was MSEK 0. The operating profit for the first quarter 2005, excluding capital gains, was MSEK -38. The result for the first quarter 2005 was charged with approximately MSEK 20 for the restructuring program implemented during the first half year 2005. The improved profit was mainly due to an improved profit within Temporary Staffing and Recruitment in Sweden, and the Contact Center operation (Proffcom). The cash flow from current operations was MSEK 12 (-50).  The improved cash flow is due to the improved result and to a reduced tied-up working capital.

- Even if the result is substantially better than last year, it is far from satisfactory. We continue to work with an intense focus on improved profitability, says Lars Wahlström, CEO Proffice AB.

Temporary Staffing and Recruitment
Temporary Staffing and Recruitment shows a net turnover of MSEK 574 (443), an increase by 30 per cent, and an operating profit of MSEK 11 (-14). Proffice’s operations in Sweden, Norway and Denmark have developed well, while the Finnish operation had a weaker development during the start of 2006. Even if the activity area shows a positive result the margins are still unsatisfactory and further efforts will be taken to increase efficiency and to improve profitability. Proffice acquired Proffice Aviation in June 2005 and HSG Henkilöstöpalvelut Oy in December 2005. These two units had a turnover of approximately MSEK 30 and approximately MSEK 15 during the first quarter 2006.

Outsourcing
Outsourcing shows a net turnover of MSEK 61 (100) and an operating profit of MSEK -1 (-11). The reduced turnover is mainly due to the fact that the Inhouse-business area and Proffcom’s operations in Norway and Denmark were sold and partly phased out during 2005. The sold and phased out units had a turnover of approximately MSEK 38 during the first quarter 2005. The remaining Outsourcing units continue to work under the new brand Proffice Service Centers. Operations are divided into three business areas; Payroll Center, Economy Center and Contact Center (Proffcom). The result within Contact Center has improved compared to 2005, mainly as a result of the operations in Norway and Denmark being sold and partly phased out. The remaining operation in Denmark will be phased out before the summer 2006. The Payroll Center and Economy Center show a positive result.

Career & Development
Career & Development had a turnover of MSEK 20 (13) with an operating profit of MSEK 1 (-3). During 2005 Proffice invested in a build-up of a local organisation in Sweden with the aim to take advantage of new business opportunities generated by funds for conversion projects made available by TSL Employment Security Fund (Trygghetsfonden). Proffice’s active presence on the market has contributed to a strong growth during 2006 of TSL-business as well as other conversion projects.

Sweden
The net turnover was MSEK 398 (342). The operating profit, excluding unallocated parent company expenses amounted to MSEK 10 (-17). The improved operating profit is mainly due to a stronger result within Temporary staffing and Recruitment.

Norway
The net turnover amounted to MSEK 152 (124) MSEK. The operating profit amounted to MSEK 5 (-3). Proffice’s operations within Temporary staffing and Recruitment show a strong growth and an improved result, compared to last year. The improved result is also due to the sale of the Norwegian Contact Center in April 2005. The turnover for the sold operation was MSEK 9 with an operating result of MSEK -4 during the first quarter 2005.

Denmark
The net turnover was MSEK 56 (52). The operating profit was MSEK -3 (-11). Proffice’s operating profit within Temporary staffing and Recruitment showed a strong development during 2006. During the fall 2005 a major part of the Contact Center operation in Denmark was phased out. The phased out operation had a turnover of approximately MSEK 5 with an operating profit of approximately MSEK -4 during the first quarter 2005.

Finland
The net turnover amounted to MSEK 49 (38). The operating profit was MSEK  -1 (3) MSEK. HSG Henkilöstöpalvelut Oy acquired in December 2005 had a turnover of approximately MSEK 15 during the first quarter 2006. Proffice’s other operations within Temporary staffing and Recuritment and Contact Center have a lower turnover compared to 2005. Proffice has taken measures to increase sales and to widen the customer base.

Personnel
The average number of full-time employees was 6,279 (5,617).

Earnings development
Operating profit amounted to MSEK -4 (19). The operating profit for the first quarter 2005, excluding capital gains, amounted to MSEK -38.

The unallocated parent company expenses were MSEK -15 (-10). The parent company expenses for 2006 include severance pay of MSEK 4 for changes of personnel in Sweden and Denmark, as earlier communicated.

The Group staff cost of MSEK 571 (504), include a cost for administrative staff of MSEK 86 (74).

Depreciations of tangible assets amounted to MSEK 4 (4). Earnings after financial items amounted to MSEK  5 (14). Financial items include exchange rate differences of MSEK 0 (-2). Earnings after tax for the period amounted to MSEK -5 (11). The group taxes for the period amounted to 0 (-3) MSEK.

Financial position and liquidity
Liquid assets as of March 31, 2006 were MSEK 54 (134) and the equity/assets ratio was 25 (25) per cent. Approximately MSEK 15 (33) of cash and bank were as per March 31, 2006 frozen to cover guarantees made by Proffice to the buyer of RC Consultants. The disposable liquid assets, including unused credit undertakings but excluding frozen funds, amounted to MSEK 113 (168).

The interest-bearing liabilities amounted to MSEK 147 (189). The reduced interest-bearing liabilities refer mainly to a reduced utilization of the committed credit line in Sweden.

Group shareholders’ equity as per March 31, 2006, was MSEK 241 (231).

Cash flow
The change in Group liquid assets during the period was MSEK -33 (-39). The cash flow from current operations was MSEK 12 (-50), of which changes in working capital amounted to MSEK 15 (-9) MSEK. The cash flow from investment activities was MSEK -9 (81), of which acquisitions amounted to MSEK -6 (-10), sales of subsidiaries amounted to MSEK 0 (95), acquisitions of tangible fixed assets was MSEK -3 (-4). Cash flow from financing activities was MSEK -36 (-72) and relates to amortisation of short term loans.

Acquisitions and Sales
In January 2006 Proffice acquired a previous franchisee in Norway. The acquired company had a turnover of approximately MSEK 18 during 2005.

Parent company
The parent company includes among other things Group functions for Finance and Communications. The net turnover amounted to MSEK 1 (8) MSEK and consists of intra-Group invoicing of services only. The earnings after financial items amounted to MSEK -12 (-13). The disposable liquid assets amounted to MSEK 74 (60) including unutilized credit undertakings of MSEK 74 (0).

Accounting principles
The interim report for the Group have been prepared in accordance with IAS 34 – Interim reporting and RR 31 – Consolidated interim reports. The same accounting principles have been used as those of the annual report 2005.

The parent company’s accounts have been prepared in accordance with the Swedish annual Accounts Act.

Stockholm May 4, 2006

Lars Wahlström
CEO

Proffice AB (publ), reg.nr. 556089-6572, P O Box 70368, SE-107 24 Stockholm, Sweden.
Phone +46 8 787 17 00, www.proffice.com

Questions related to this report will be answered by:
Lars Wahlström, CEO, Phone +46 8 787 17 00 or +46 73 3434 200, lars.wahlstrom@proffice.com
Fredrik Lindgren, CFO, Phone +46 8 787 17 00 or +46 73 3434 020, fredrik.lindgren@proffice.com

For further information please see www.proffice.com

Upcoming reports
Interim report January – June 2006:  August 10, 2006, at 08:00 (CET)
Interim report January – September 2006:  November 9, 2006, at 08:00 (CET)

Proffice is the Nordic flexible staffing company. We have more than 10,000 employees and provide temporary staffing, recruitment services, outsourcing, and career & development programs. The Proffice share is listed on Stockholmsbörsen (Stockholm Stock Exchange).