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Company News, 2001-03-22, 01:00 AM

Summary of the speech by Dr. Peter Chylla, Chairman of the Managing Board ThyssenKrupp Information Services

<b>Press conference</b>
ThyssenKrupp Information Services
Thursday, March 22nd 2001, 1:00 p.m.
CeBIT 2001, hall 4, booth A 22/C 22

- The spoken version is valid -

Ladies and gentlemen,

as we have in both previous years, we will begin our press conference with a review of the year. And for ThyssenKrupp Information Services, it has been gratifying to say the least: As announced at the CeBIT 2000, we`ve done some acquisition, increased our revenues, expanded internationally, founded new firms, merged and in the process, remained focused.

When we talk about the ThyssenKrupp Information Services Group, its position and importance within the entire ThyssenKrupp corporate group cannot remain unmentioned.

Information Services at Serv

The Business Unit Information Services, as it`s called in official company jargon, has for the first time managed to appear on "page 1" of the official organizational chart. We want to make sure that this remains that way.

As you may well know, with six segments, ThyssenKrupp places its focus on the central areas steel, industrial goods and services.

The segment Serv is of particular importance to us: After all, the company that leads this area, the ThyssenKrupp Serv AG (currently being founded) is, with ca. two billion euro in revenues and approx. 25,000 employees, our parent.

Serv is pure service: All services in and around industry and facilities are united here. Everything in the sense of one-stop shopping. The reason for this: Increasingly, customers want to concentrate on their core business and place all other tasks in the hands of service partners. From maintenance and upkeep over technical facility management up to high-quality IT and communication services. For this purpose, specialized companies that are among the leaders in their respective sectors were brought together under ThyssenKrupp Serv`s roof.

We are a pioneer in Europe with this concept!

Where does ThyssenKrupp Information Services stand within this union?

The target group is the same: We offer industry a combination of IT systems house and multimedia service provider that is unique on the market. Our two main companies and main brands are Triaton and Xtend.

Let`s start off by looking at the group`s facts and figures.

Facts and figures

In the current fiscal year (9.30.), we plan to for the first time reach the one billion DM revenue hurdle, which, if you should remember, we had originally announced for the coming year. This represents a 50 percent increase over last year. At present, the share of business from outside the corporate group already amounts to 65 percent.

There is also a continuing upward tendency as far as the number of employees is concerned: At present, ca. 3,400 employees work for Information Services worldwide on four continents. That`s twice as many as last year. And this with an unusually low fluctuation rate for this sector, in the single-digit percentile range!

What exactly is our business?

We plan, build and operate global IT and multimedia solutions above all for industry. The service spectrum of the entire group extends from consulting over computer center outsourcing, speech-data communication, SAP services, application development, telematics, satellite communication, broadcasting, eBusiness, information systems, digital TV, education and training up to multimedia.

As you see, "service" is really too complex to be summed up in one word.

If this sounds like a department store to you, you`re right. To us, one-stop shopping means, first of all, making everything that the customer desires possible. And this is, in an age where information technology is penetrating an ever increasing number of business processes, quite a lot.

So we don`t set our focus on a product, but solely on the needs of our customers.

One-of-a-kind combination of IT services and multimedia/Internet

Today, with Triaton, we are among the leading international systems houses. In Germany, we`ve established ourselves among the "Top 3" manufacturer-independent companies. And in the meantime, Xtend plays an important role in its own league, the "Top 10" multimedia agencies.

As already mentioned previously: The combination of IT and multimedia is one-of-a-kind on the market. Why? Because our competitors always only serve one of these areas. On the IT side, in Germany this is valid for T-Systems as well as for Siemens Business Services. In the multimedia sector, GFT, Pixelpark and Kabel New Media are indeed setting creative accents, but without the corresponding systems house component.

Triaton is our key player as far as one-stop shopping for IT services is concerned. Xtend is our successful and innovative multimedia service provider, operating for Triaton as well as independently on the market.

Tradition meets New Economy

An additional essential competitive factor - and a must for our entire group - is the globalization of industry. A company that has decided to outsource its IT and that has branches in 15 different countries certainly doesn`t want to enter into 15 different outsourcing contracts. One, at the most two, providers is the utmost that is acceptable. In this context, giving us the contract is quite simple: Globally, we go with the customer and his suppliers as well.

Last year`s business development shows that we are the right partner here. Now, with 50 locations worldwide, this is much easier for us than just a year ago!

Ladies and Gentlemen,

With our trade fair motto "Tradition meets New Economy", we`re taking on a very up-to-date topic in our sector: The shimmering world of bits and bytes has recently burst like so many soap bubbles on the floor of the stock exchange. Rather than exotic business concepts, long-standing customer relationships and profitable companies once again come into the limelight of analysts and investors. The New Economy orients itself more vigorously on the Old Economy. And it, on the other hand, has recognized the opportunities of the wonderful new Internet world. Across the board, the traditional companies want "in". If possible, with their complete and complex business processes. Many companies see this as an opportunity to concentrate more fully on their own core business.

But who should they turn to? To whom should they delegate the responsibility of keeping especially their eBusiness running around the clock, 365 days a year?

For a so-called start-up alone, no matter how good he may be, it`s simply too much to handle. For simply decorating the shop window beautifully, in the sense of glamorous Web design, isn`t enough any more. There also has to be someone that has a good grip on the entire store. Including warehousing, procurement and sales, supplier and customer care etc., etc., etc..., so the entire downstream business and merchandise management.

What, exactly, does eBusiness really mean? Probably only the extension of one`s own company IT in the direction of customers and suppliers.

And that is nothing more than an automation process, something that already has its place of value in the history of industrial data processing. The automation of many activities that were, until recently, still handled internally (e.g. filling out order forms) and that are now being shifted to customers or suppliers.

So who is a reliable partner for realizing such a thing around the clock? Who has the required size and experience? And above all, who has already proven that he can do it?

We (are, do and have)!

With our industrial background, we have references in our own house to prove that we can make "old industry" fit for "eConomy".

Let`s just take a look at our roots: ThyssenKrupp Information Services, especially our largest subsidiary Triaton, stems from the internal IT units of Thyssen, Krupp, Hoesch and Hoechst.

And Xtend, too, has its past: It came from the former Thyssen Telecom. My colleague Dieter Weisshaar will acquaint you with the details on Xtend subsequently.

Let`s take a closer look at the Triaton Group at this point!

Triaton - best performer

Triaton advertises itself with the slogan "The BusinessProcessor". This describes the company`s business purpose very well. Namely the representation of complex business processes through IT and eBusiness.

The Triaton Group has locations all over the world and operates its own high-performance hosting and customer care center.

Represented worldwide, Triaton alone produces 80 percent of the entire ThyssenKrupp Information Services Group`s revenues with its 2,500 employees and, with ca. 500 operated systems, is Europe`s leading SAP service provider.

The latter is a significant, unique characteristic. SAP continues to enjoy great popularity with companies. Those who have control over the ERP systems (programs for the representation of the entire business) today, will also be responsible for the eBusiness systems that augment them in the future. For which fully satisfied customer, without an emergency, changes over to a new service provider?

Who are our customers?

The Triaton Group places its focus on clear segments within industry and serves customers of the following sectors:

- Automotive (Mannesmann VDO, Honeywell...)

- Chemicals (Basell Polyolefine, Ticona...)

- Life science/health care (Aventis Pharma, Dade Behring, Klinikum Wuppertal...)

- Logistics/telematics (BRAMBLES, ATG, Koegel, DB Cargo...)

- Mechanical and plant engineering (Kloeckner Holstein Seitz, Krupp Berco Bautechnik, Blohm &amp; Voss...)

- Metal/paper/wood (ZAPP AG Stahlwerk Ergste-Westig, ISPAT Germany...)

- Trading (Imperial Logistics International, Verband der Vereine Creditreform...)

In the eBusiness area, Triaton plans, implements and operates complete IT environments. Solutions for supply chain manage-ment (SCM), customer relationship management (CRM), electronic data interchange (EDI) as well as for auctions, portals, online shops, B2B marketplaces or also enterprise resource planning (ERP) and HR management belong to its range of services. As an application service provider (ASP), Triaton offers one-stop shopping from customer-specific solution packages up to full service.

Needless to say, partnerships exist with all the large and relevant manufacturers.

Competitive advantages

Completely devoid of megalomania, we now realize that we were probably the first and last in Germany to have managed the leap from internal IT service provider to commercialized top player with considerably more than 50 percent in externally generated revenues.

To come to the point: What we have to offer in the first instance is not hard- or software, not know-how or a little service, but responsibility!

A responsibility that we`re very pleased to take on: After all, our industrial past is characterized by decades of "24-hour thinking", which makes a great difference as compared to the younger competitors of our sector. What they`re still learning the hard way is self-evident to us and is reflected in shift work, employees on standby and telework - for management as well.

I like to refer to a symbol of the "Old Economy" here, the blast furnace, which can`t simply be shut off for awhile.

So how do things continue? After all, the competition doesn`t sleep.

Worldwide expansion

Our objectives are ambitious and remain so: To date, only 15 percent of our revenues stem from abroad. Our medium-term target, three to five years, is 50 percent foreign revenues. This is, by the way, the actual level of the entire corporate group.

As far as employees are concerned, we also plan to continue expanding for global coverage. In the future, we really have no other choice but to operate with the required critical size in the world`s ca. 30 to 40 largest areas of industrial concentration. Because our target group operates here. Particularly in the eastern part of the USA, in South America and Europe. But also in Asia. We count on 300 to 500 employees in each of these industrial areas.

At an average market growth rate of ten to twelve percent we expect, if all goes well, the number of employees to triple to 10,000 worldwide in three to five years. Revenue prospects look similar.

This can be realized either through the acquisition of companies (such as e.g. HiServ) or through the takeover of industrial IT units (e.g. KHS).

Ladies and Gentlemen,

the ThyssenKrupp Information Services Group`s success stands proof to our company`s excellent "bridge building" between the "Old" and the "New Economy".

Yet we are also a company undergoing great changes. That`s why the consistent further development of our service profile and our external presentation on the market continue to have utmost priority. We owe this to ourselves and to our customers.

Thank you very much!

I now turn the presentation over to my colleague Dieter Weisshaar, Chairman of the Board of Directors, Xtend.

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