EDB Business Partner reports Q4 results

This produced an all-time high operating margin (EBITA margin) of 10.0%. Operating revenue for 2004 as a whole totalled NOK 4,236 million. After adjusting for divested and discontinued businesses, this represents an increase of 9% from 2003.

Operating profit for 2004 was NOK 388 million as compared to NOK 165 million in 2003, and the operating margin of 9.2% for the year is the highest in the company's history.

Fourth quarter operating revenue was 13% higher than in the same period of 2003 after adjusting for divested businesses. Operating profit improved from NOK 106 million in the fourth quarter of 2003 to NOK 114 million for the same quarter in 2004. This gave EDB an operating margin (EBITA margin) of 10.0% in the fourth quarter of 2004, up from 9.5% in the same quarter of 2003.

"The fourth quarter results bring a record year for EDB to a close. We are growing significantly faster than the market, our year-on-year profitability improved every quarter in 2004 and we have delivered the highest operating profit and best operating margin in the company's history. In the fourth quarter we focused a lot of attention on integrating the activities acquired from Telenor, but at the same time we carried out new acquisitions and signed long-term contracts with a number of customers. Considering that the group at the same time delivers a double-digit operating margin for the first time is certainly pleasing" comments CEO Endre Rangnes. "We have started 2005 in a significantly stronger position in both Norway and Sweden" adds Rangnes.

In December 2004, the Norwegian parliament approved the government's proposals on taxation reform set out in White Paper No. 29. The changes approved in the tax treatment of gains and losses arising from disposals of shares (the "tax exemption model") have an impact on the value of the EDB group's deferred tax assets. EDB has gained approval for transitional arrangements which, relative to the consequences previously disclosed, will reduce the adverse effect of the tax treatment by NOK 132 million. EDB has decided to reverse NOK 490 million of deferred tax assets in the fourth quarter of 2004 with an equivalent increase in the group's tax payable.

The board has approved a new dividend policy aiming to pay an annual dividend to the company's shareholders equivalent to 20-50% of normalised after tax earnings where this does not, in the view of the board, have a material adverse effect on the group's capital structure and plans for future growth. The board recommends that the annual general meeting should approve a dividend for 2004 of NOK 0.50 per share.

Operating revenue of NOK 1,138 million in the fourth quarter represented an increase from NOK 1,113 in the same quarter of 2003. Businesses divested generated revenue of NOK 105 million in the fourth quarter of 2003, giving adjusted year-on-year growth for the fourth quarter of 13%.

For 2004 as a whole, operating revenue totalled NOK 4,236 million as compared to NOK 3,880 million in 2003 after adjusting for businesses divested and discontinued. This represents an increase in operating revenue of 9%. Operating profit increased by 25% from NOK 311 million in 2003 to NOK 388 million in 2004. Operating margin was 9.2% in 2004 as compared to 7.3% in 2003, adjusted for non recurring items.

The group's cash flow from operations remains strong, and totalled NOK 283 million in the fourth quarter which, as expected, was somewhat lower than in the same quarter of 2003. The group's liquidity reserves were almost NOK 900 million at year-end, despite payments made for acquisitions in the fourth quarter of over NOK 600 million.

IT operations reported fourth quarter operating revenues of NOK 888 million, around 17% higher than for the same period last year. The business area's operating profit (EBITA) was 22% higher than the same quarter of 2003 at NOK 89 million, representing an improvement in margin from 9.6% in the fourth quarter of 2003 to 10.0%.

Bank & Finance reported operating revenues for the quarter of NOK 219 million, up 4 % from the same quarter in 2003 after adjusting for businesses sold. Fourth quarter operating profit (EBITA) was NOK 35 million up from NOK 30 million for this quarter last year. Operating margin was again at a very high level, with 16.0% for the fourth quarter of 2004 as compared to 14.1% for the same period last year.

The telecom business area showed some signs of improvement despite continuing difficult market conditions. Operating revenue of NOK 61 million was 11% lower than for the same quarter of 2003 after adjusting for businesses sold. Fourth quarter operating profit (EBITA) was NOK 3 million, representing an operating margin of 4.8%, which demonstrates that the business area is heading in the right direction, although neither the level of activity nor earnings are satisfactory.

"We have strengthened our strategic position in the fourth quarter" says CEO Endre Rangnes. "The acquisition from Capgemini and a number of major new contracts in both Norway and Sweden means that we are now the third largest player for IT outsourcing in the Nordic market. Over the course of 2004 we have moved from tenth to sixth place in the overall Nordic IT services market. This means that we are well positioned to benefit from market growth going forward, and EDB will focus on a combination of operating - and applications services" adds Rangnes.

The parent company reported an operating loss of NOK 13 million for the quarter as compared to a loss of NOK 16 million for the same quarter of 2003. Goodwill amortisation was NOK 41 million, as compared to NOK 37 million in the same quarter of 2003.

Net financial items represented a charge of NOK 7 million in the fourth quarter as compared to NOK 6 million in the same quarter last year. Net interest expense was NOK 17 million, up from NOK 10 million in the same quarter of 2003. The increase was due entirely to the cost recognised in connection with the refinancing of the group's borrowings for the final part of the interest rate hedging program.

The group reports an after tax profit for the fourth quarter of 2004, before the effect of the tax reform, of NOK 45 million as compared to NOK 55 million for the same quarter in 2003. Earnings per share amounted to NOK 0.50 for the quarter, before the effect of the tax reform, as compared to a NOK 0.61 for the fourth quarter of 2003. Including effects of the tax reform, the post-tax result for the fourth quarter of 2004 shows a loss of NOK 445 million and a loss per share of NOK 4.92.