EDB ErgoGroup reports consolidated revenue for the fourth quarter of 2010 of NOK 3,363 million, as compared to pro forma revenue of NOK 3,296 million in the same quarter of 2009.
Operating profit before intangible asset amortisation and synergy costs (EBITA) was NOK 171 million, as compared to pro forma NOK 283 million for the fourth quarter of 2009. The company is now reporting revenue growth after seven quarters of decline.
"EDB ErgoGroup is not pleased with its results for the fourth quarter. We have implemented a number of measures, and these together with the on-going synergy program will help to strengthen the company's profitability. EDB ErgoGroup has started 2011 as a unified and effective company with its focus on the Nordic IT services market. It is pleasing to see that all the group's business areas reported organic growth in the fourth quarter after several quarters of declining revenue, and we have made particularly good progress in the SMB market and in banking and finance services, as well as in the Swedish market", comments Terje Mjøs, CEO of EDB ErgoGroup
Consolidated pro forma key figures and main features of the fourth quarter of 2010
• Operating revenue NOK 3,363 million (NOK 3,296 million), 2 percent organic growth
• EBITA before synergy costs NOK 171 million (NOK 283 million)
• Revenue growth and good earnings performance for SMB and Bank & Finance
• Earnings held back by Public Sector (SAP) and drop in business volumes from customers of former IS Partner
• Synergy program proceeding in line with plans
• Restructuring costs of NOK 134 million
• Cash flow from operations NOK 280 million (NOK 671 million)
• New share issue of NOK 897 million
Pro forma key figures for 2010
• Operating revenue NOK 12,447 million (NOK 12,706 million)
• EBITA before synergy costs NOK 749 million (NOK 919 million)
• Cash flow from operations NOK 565 million (NOK 1,065 million)
• CAPEX of NOK 352 million (NOK 416 million)
• Order backlog of NOK 17,788 million at the close of 2010
• Earnings per share NOK -2.03 (NOK 1.36)
Consolidated fourth quarter 2010 pro forma figures for the business areas of EDB ErgoGroup
IT Operations: The IT Operations business area reports revenue of NOK 2,021 million for the fourth quarter of 2010 as compared to pro forma NOK 1,976 million for the fourth quarter of 2009. EBITA for the fourth quarter of 2010 was NOK 109 million, as compared to pro forma NOK 136 million in the fourth quarter of 2009.
Solutions: The business area reports revenue of NOK 548 million for the fourth quarter of 2010 as compared to pro forma NOK 504 million for the fourth quarter of 2009. EBITA for the fourth quarter of 2010 was NOK 3 million, as compared to pro forma NOK 66 million in the fourth quarter of 2009.
Consulting: The business area reports revenue of NOK 1,065 million for the fourth quarter of 2010 as compared to pro forma NOK 1,018 million for the fourth quarter of 2009. EBITA for the fourth quarter of 2010 was NOK 96 million, as compared to pro forma NOK 109 million in the fourth quarter of 2009.
Fourth quarter results in Sweden
Revenue in Sweden (including Finland) was NOK 920 million in the fourth quarter of 2010, representing an increase of 18 percent from pro forma NOK 779 million for the fourth quarter of 2009. After adjusting for currency effects, this represented growth of 16 percent. Growth was reported in revenue from consulting activities both in the SMB segment and in the large customer segment. In addition, product sales showed an increase.
The IT services market in Norway and Sweden showed a decline in the first half of 2010, but the market showed clear signs of growth over the second half of the year. The market research companies IDC and Gartner expect to see moderate growth in the IT services market in 2011 in line with improving conditions in the economy as a whole.
EDB ErgoGroup expects to see market growth in 2011, driven particularly by the customer segments public sector, bank & finance, SMB and the consulting area. The large customer segment of the outsourcing market in Norway is currently affected by downward pressure on prices and a shortage of new contracts in the market. These trends, combined with the loss of customer contracts representing revenue in the order of NOK 200 million in 2011, mean that the company expects a continuing decline in revenue from operating services for the large customer segment in Norway in 2011. On the other hand, the company expects its revenue from operating services for the large customer segment in the Swedish market to show moderate growth.
The Board of EDB ErgoGroup is maintaining a strong focus on ensuring that the company continues to strengthen its profitability. Focus in 2011 will be on delivering the synergy targets that the company has set.
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