Orc looks ahead after challenging year

Source: Orc Software

Orc Software: Year-end report January 1 - December 31, 2010:

The board proposes a dividend of SEK 7 per share
- Continued strong sales in the fourth quarter
The annualized contract value rose by SEK 7m, excluding exchange rate effects, compared to the third quarter of 2010.

The Board has decided to propose to the AGM a dividend of SEK 7 (10) per share, which is equal to a total dividend of SEK 163.7m (154.7).

The annualized contract value (ACV) at the end of Q4 2010 was SEK 686.4m (652.3), an increase of SEK 34.1m, or 5%, compared to Q4 2009.

The transaction net was SEK 30.1m (-) and the transaction margin was 39% (-) for Q4 2010.

October - December 2010

· Operating revenue of SEK 268.1m (180.3)
· Revenue growth of 49%
· Operating income of SEK 20.3m (60.9)
· Operating margin of 8% (34)
· Income after tax of SEK 18.8m (46.6)
· Basic earnings per share of SEK 0.80 (3.07)

January - December 2010

· Operating revenue of SEK 976.7m (704.9)
· Revenue growth of 39%
· Operating income of SEK 75.0m (207.5)
· Operating margin of 8% (29)
· Income after tax of SEK 44.3m (150.4)
· Basic earnings per share of SEK 2.09 (9.89)

The Neonet Group is consolidated as of April 1, 2010. The actual transaction date was April 7.

CEO Thomas Bill comments:
The year ended with continued robust sales and a falling rate of churn in the Technology segment. Orc's sales have remained solid as a result of our competitive solutions, strong organization and very solid finances despite the fact that technology providers have been impacted by the strained situation that has prevailed since the start of the global financial crisis.

It is also satisfying that our other technology operations in CameronTec have continued to develop favorably, which we see as proof that we made the right decision in transferring these operations to a separate unit.

For our Transaction Services, the fourth quarter was somewhat better than the third thanks to higher trading volumes in October and November and a rising transaction margin, which is a result of our increased focus on customer profitability. However, volumes on the stock markets where our customers trade remain very low.

The gradual rise of the Swedish krona against the US dollar and the euro has had an inhibiting effect on both growth and earnings.

I feel optimistic about Orc's outlook for 2011 in view of our business model with recurring license revenue in the Technology segment, competitive solutions, sustained focus on profitability in Transaction Services and strong organization. I am also confident that we are on the way to meet our target for 2012 to realize synergy effects of SEK 130m from the merger between Orc and Neonet and achieve an anticipated minimum operating margin of around 20% in a weak market and of 35% or more in favorable conditions.

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