Nocom AB (publ) Interim report January - June 2006

Improved operating profit in all units, strong finances and high growth in software business - All business areas delivered increased earnings and operating margins. - Powerful expansion in Software business area – successful sales in IAR Systems and acquisition of Northern. - Strong finances and dramatically improved cash flow from operating activities.

First half 2006

- Net sales amounted to SEK 389.9 (237.2) million.

- Operating profit reached SEK 23.7 (5.8) million.

- Operating margin was SEK 6.1 (2.4) percent.

- Profit after financial items was SEK 22.4 (4.9) million.

- Profit after tax totaled SEK 15.5 (4.0) million.

- Earnings per share were SEK 0.14 (0.03).

- Cash flow from operating activities was SEK 22.9 (-11.8) million.

- Available cash and cash equivalents amounted to SEK 115.9 (108.2) million.

- Equity at June 30 is reported at SEK 523.4 (392.8) million.

- Equity per share at June 30 was SEK 4.91 (3.97) million.

Second quarter of 2006

- Net sales amounted to SEK 178.1 (176.7) million.

- Operating profit reached SEK 8.3 (8.8) million.

- Operating margin was SEK 4.7 (5.0) percent.

- Profit after financial items was SEK 7.1 (8.0) million.

- Profit after tax totaled SEK 4.8 (7.2) million.

- Earnings per share were SEK 0.04 (0.05).

- Cash flow from operating activities was SEK 5.0 (-8.9) million.

- Former CFO Stefan Ström took up the post of CEO on May 3. He succeeded Stefan Skarin, who was elected Chairman by the Annual General Meeting.

- At the beginning of April Nocom acquired Northern, a leading provider of proprietary software for Storage Resource Management (SRM). Northern has annual sales of approximately SEK 20 million and 22 employees, of whom seven are based in the USA. The total purchase consideration of SEK 25.4 million includes of sum of SEK 7 million to be paid over a period of three years.

Subsequent events

- In July Northern signed a strategic collaboration agreement with EMC Corporation to facilitate interoperability of Northern Storage Suite with EMC’s storage systems. The collaboration will enable Nocom to build solutions integrated with EMC’s storage platforms.

Comments from the CEO

After a few months as CEO it is time for me to sum up a successful first half of 2006. Nocom is continuing to grow – both organically and through acquisitions – with unbroken profitability. The Group reported net sales of SEK 390 million for the first six months of the year, an increase of nearly 65 percent. At the same time, profitability was strengthened and operating profit reached SEK 23.7 million, a quadrupling compared with the first half of 2005. All units have improved their financial performance over the previous year – in both the first and second quarter – and cash flow from operating activities rose dramatically. After a stable second quarter we are now stepping up the pace of the Group’s development, where the priorities are to futher grow our software business and boost profitability in the distribution area.

In May I took up the post of CEO of Nocom. I have been with the company since the IPO in 1999 and the IT boom of the late 90s, through uninhibited growth and the heavy losses of the early 2000s. In 2001 I became Chief Financial Officer, the same year that Stefan Skarin was appointed CEO. The past five years have been marked by Nocom’s tough but successful journey from loss-making company to expanding and profitable IT group. With the past year’s major acquisitions now behind us and bolstered by our strong finances and stable profitability, we have a whole new freedom to shape the Group’s future.

In the spring we launched an initiative to accelerate the Group’s long-term strategic development. In connection with this, Stefan Skarin left the CEO post to take over as Working Chairman. In this capacity, he will be able to focus his energy on realizing the growth potential found in the Group. AS CEO, I will concentrate on the Group’s long-term profitability, financial structure and ongoing improvements in operating efficiency. This means that we will continue working in close collaboration, albeit in new roles.

In the second quarter the Software business area showed especially impressive performance driven mainly by fantastic sales and profitability growth in IAR Systems, which has confirmed and strengthened its position as a leading global supplier of development tools for embedded systems. The first half of 2006 was marked by increased sales of both proprietary software and support contracts, extended collaboration with strategically important business partners around the world, interesting development projects and ventures in the fast-growing ARM technology. Amid rising profitability and powerful expansion, IAR Systems has also created excellent scope for future profitability gains and growth. In short, IAR Systems is on a solid growth trajectory – and its future potential is enormous. We have therefore raised the company’s operating margin target to 15-20 percent.

The Software business area was also enlarged through the April acquisition of Northern, a Swedish provider of proprietary software for Storage Resource Management (SRM). Northern operates as an independent subsidiary in the Nocom Group and is now collaborating with Distribution operations in the Nordic market, which is expected to generate tangible synergies already this autumn. Northern currently derives around half of its sales from the USA and efforts are being made to increase distribution and sales primarily in Europe, in line with our expressed strategy for the year – to maximize growth in the Software business area.

In the Distribution business area, where the foremost goal is not growth but increased profitability, we are also starting to see the results of our efforts. Operating profit for the first half of 2006 more than tripled over the year-earlier period to SEK 15.9 million. The spring’s profitability enhancement measures expected to bear fruit in the second half of the year. In Nocom Security, where the earnings trend has not been satisfactory, a number of changes were introduced during the spring. The company’s President resigned in June, investments are being made in a new ERP system that will streamline the sales process, the product mix is being looked over and the Norwegian customer base for Utimaco’s software was acquired from Buysec AS at the end of the second quarter – all to improve efficiency and boost earnings.

It has also been a good half year from a financial perspective, since we were able to complete the offer to TurnIT’s stockholders. Operations in both TurnIT and IAR Systems were successfully integrated already last year and although this process was carried out swiftly, it is satisfying to formally complete the acquisition. It is also positive that holders of a full 99.5 percent of all shares in TurnIt have chosen to accept our offer, which was unchanged throughout the offer period, so that the redemption of all remaining TurnIT shares can begin. Thanks to the nearly 100% acceptance rate the upcoming mandatory redemption will have only a marginal impact on the company’s finances, which is good for Nocom our 20,000 stockholders.

We look forward to continued robust development throughout the remainder of 2006 and will continue to prioritize long-term profitability and growth. In the autumn we will step up our development efforts – to boost earnings in Distribution and achieve additional growth in Software.

Stockholm, Wednesday, August 23, 2006

Stefan Ström

Chief Executive Officer

Nocom AB (publ)