EDB reports operating profit (EBITA) of NOK 151 million for the
second quarter of 2009>
EDB reports operating profit (EBITA) of NOK 151 million for the second quarter of 2009
(Thomson Reuters ONE) - (Oslo, 15 July 2009) EDB reports operating profit before intangibleasset amortisation (EBITA) of NOK 151 million for the second quarterof 2009. Second quarter revenue was NOK 1,923 million. During thecourse of the second quarter, EDB signed new contracts totalling NOK1.7 billion, representing an increase of 70% from the same quarter in2008."EDB has experienced a first half-year characterised by lower demandin the IT services market. Market conditions will continue to bechallenging in the second half of 2009, especially in the consultingarea, but we believe that the slump in demand is now past its lowpoint. We are not pleased to report a decline in EBITA, but given thecurrent challenging market conditions we are pleased to see that thedecline in earnings is coming to a halt. This is due not least totight control of costs and the impact of the improvement program weannounced in the first quarter of 2009", comments Endre Rangnes, CEOof EDB.Cost reduction programIt was apparent at the start of 2009 that conditions in the Nordic ITservices market were markedly weaker as a result of the internationaleconomic situation. Against this background, EDB implemented animprovement program in the first quarter of 2009. The programcomprises measures both to increase revenues and to reduce costs.Potential annual cost reductions of NOK 400 million relative to thecost base at the start of 2009 have been identified in the areas ofpersonnel, hired-in consultants, software and other material costs.Of this, reductions in non-employee related costs are estimated torepresent NOK 250 million. The improvement program will help toensure good profitability for the group in the future.In the second quarter of 2009, EDB implemented measures to reduceexpenditure on hired-in consultants and on software and othermaterial costs. In addition, the company has decided to take furthersteps to improve its efficiency, principally in the IT Operationsbusiness area and in staff/support functions. This will result in areduction in staffing in excess of 100 employees. This program istargeted to achieve an annual cost reduction in the order of NOK 65 -75 million. EDB will provide further information on this program oncethe detailed plans are complete and the necessary decisions have beentaken.Changes to pension arrangementsSince the close of the second quarter, the Board of Directors of EDBBusiness Partner ASA has resolved to close the current definedbenefit pension schemes in Norway. The future pension costs of thecurrent defined benefit schemes are unpredictable, and the value ofpension liabilities fluctuates considerably from year to year. Thenew defined contribution scheme will give the company greaterpredictability and lower costs. In addition, harmonising the pensionarrangements offered within the group will facilitate internalmobility. All employees that are members of these schemes will betransferred to the company's defined contribution scheme with effectfrom 1 September 2009. Compensation arrangements have been proposedfor employees in connection with the transfer to the new pensionscheme.The transfer to the new pension scheme will cause a significantnon-recurring reduction in the book value of pension liabilities,which will be recognised to profit and loss in the third quarter. Thechange will also cause an increase in equity and strengthen thecompany's capital ratio. The annual cost of the new arrangements isestimated to represent a saving in the order of NOK 70 millionrelative to the current pension schemes, and this will help tostrengthen the company's financial condition in future years.High level of new contracts signed for outsourcing, and in the Bank &Finance areaEDB's order backlog at the close of the first six months of 2009 wasalmost NOK 14.2 billion. The company signed three outsourcingagreements with new customers in Sweden in the first half of theyear. This helped the IT Operations business area in Sweden to reportrevenue growth of 6% in the second quarter. In addition, EDBannounces today a NOK 225 million contract with a new Scandinaviancustomer. In total, these four outsourcing agreements represent totalcontract value of NOK 600 million.Bank & Finance is EDB's largest industry vertical, and accounts forapproximately 42% of the group's total revenues. This area has seen asignificant increase in assignments for customers during the firsthalf of the year, and this is reflected in growth of 6% in sales ofsolutions in the second quarter.Main features of the second quarter of 2009- Operating revenues of NOK 1,923 million (NOK 2,034 million),equivalent to a decline of 5%.- Operating profit before intangible asset amortisation (EBITA) ofNOK 151 million (NOK 191 million), equivalent to a decline of 21%.- Cash flow from operations before non-recurring items was NOK 168million in the second quarter of 2009 as compared to NOK 153 millionin the second quarter of 2008.- Earnings per share of NOK 0.42 before non-recurring items, ascompared to NOK 0.38 for the second quarter of 2008.Results from the business areas for the second quarter of 2009IT Operations: The business area reports revenue of NOK 1,107 millionfor the second quarter of 2009, as compared to pro forma NOK 1,142million for the same quarter in 2008. EBITA was NOK 91.3 million inthe second quarter of 2009 as compared to pro forma NOK 100.8 millionin the second quarter of 2008.Solutions: The business area reports revenue of NOK 385 million forthe second quarter of 2009, as compared to pro forma NOK 357 millionfor the second quarter of 2008. EBITA was NOK 54.7 million for thesecond quarter of 2009, as compared to pro forma NOK 54.8 million forthe same period in 2008.Application Services: The business area reports revenue of NOK 509million for the second quarter of 2009, as compared to pro forma NOK587 million for the second quarter of 2008. EBITA was NOK 31.8million in the second quarter of 2009, as compared to pro forma NOK57.8 million for the second quarter of 2008.Main features of the first six months of 2009- Operating revenues of NOK 3,859 million (NOK 3,872 million)- Operating profit before intangible asset amortisation (EBITA) ofNOK 285 million (NOK 364 million)- Cash flow from operations increased by NOK 161 million to NOK 187million- Earnings per share of NOK 0.90 before non-recurring items for thefirst half of 2009, as compared to NOK 1.11 for the first half of2008.Future prospectsConditions in the Nordic IT services market successively weakenedover the course of the first and second quarters of 2009,particularly in the consulting area. Market conditions are expectedto remain negative for some time to come, and this is reflected inlower capacity utilisation and downward pressure on prices forservices in certain areas. The market for outsourcing is showing anincrease in activity, and the market research company IDC expectsthis segment to show growth in the future.Based on the current market situation, the company has implementedmeasures to reduce the level of costs in all business areas.EDB is monitoring the market closely, and the company will implementfurther measures if conditions so require.Any enquires may be addressed to:Endre Rangnes, CEO. Tel: + 47 22 77 21 01Kristian Kuvaas Johansen, EVP and CFO. Tel: + 47 476 03 334Geir Remman, EVP, Corporate Communications. Tel: +47 970 55 017About EDBEDB Business Partner is one of the leading IT groups in the Nordicregion. The company offers solutions for the full range ofbusiness-critical IT services. EDB aims to be a close and attentivepartner that leverages its deep industry knowledge and internationalcapabilities to help its customers realise the full potential of IT.The company has local presence in 13 countries, 6000 employees andannual turnover of approximately NOK 8 billion. EDB Business Partneris listed on the Oslo Stock Exchange. www.edb.comhttp://hugin.info/194/R/1328851/313415.pdfhttp://hugin.info/194/R/1328851/313416.pdfThis announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
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Datum: 15.07.2009 - 08:02 Uhr
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