Mandator hopes to raise more funds through a stock market offering.

For FY2003, Mandator reported a net loss of $14.6 million, compared to a $48.3 million loss the previous year. This was on revenue that fell 28% to $57.6 million over the year. The company’s liquid assets stood at $2.1 million at the end of the year, down from $3.4 million the previous year.

The amount that Stockholm-based Mandator expects to raise through a stock market offering will be revealed in an extraordinary general meeting. The company said any money raised should enable savings of at least $2.7 million.

However, it is doubtful how much it will realistically be able to get out of the market. With a market capitalization of around $20 million, the company is already grossly undervalued. Given that it raised $5 million in August 2003 through a share issue and reduction of shares, the company will have a tough time raising enough to cover its debts and convince shareholders to invest again so soon.

In its favor, Mandator improved profitability throughout the year, and made a profit before interest, tax and amortization of $136,000 in Q4. The company’s stated objectives are to increase its EBITA margin to 10%, but this could be a long time coming given that it only reached 1% in Q4.

With the ongoing consolidation in the Nordic market, it is quite likely that the company will be snapped up by a larger competitor, such as Finland’s TietoEnator [TIE1V.HE], Sweden’s WM-Data [WM-B.ST], or Norway’s EDB Business Partner, all of which are targeting growth through acquisitions.

TietoEnator is probably the most likely buyer given that it already sources offshore development from Mandator’s 100-employee facility in Estonia. WM-Data however, has only just completed its acquisition of the Finnish company Novo Group, and will probably not look for new acquisitions so soon.

Mandator would also be a good buy for a foreign IT services company such as IBM [IBM], Hewlett-Packard [HPQ], or Cap Gemini Ernst & Young [CAP.BR], which are established across the Nordic region, but still looking for growth.

This article is based on material originally published by ComputerWire