EDB ErgoGroup's consolidated operating revenue for the fourth quarter of 2011 was NOK 3,478 million as compared to NOK 3,350 million in the same quarter of 2010, representing organic growth of 3% for the period.
Operating profit before intangible asset amortisation and non-recurring costs (EBITA) was NOK 232 million. The company's Board of Directors proposes the payment of a dividend to shareholders of NOK 0.35 per share.
"I am pleased that EDB ErgoGroup has started 2012 in a strengthened financial condition. A year ago, we announced a number of measures to improve profitability. Today's results serve to demonstrate the effect of this important task, and we have delivered earnings at a level in line with the guidance we presented a year ago. Thanks to the effort put in by all our employees, we are reporting a profit that is significantly better than 2010, and this shows that we are on the way to a new level of profitability for EDB ErgoGroup", comments Terje Mjøs, CEO of EDB ErgoGroup.
Key figures of the fourth quarter of 2011 (comparable pro forma figures for fourth quarter 2010)
• Operating revenue of NOK 3,478 million (NOK 3,350 million), 3% organic growth
• EBITA before non-recurring costs of NOK 232 million (NOK 100 million)
• EBITA margin 6.7% (3.0%)
• Implementation of the synergy program is proceeding as planned, with a run rate of NOK 230 million, up from NOK 170 million in the third quarter of 2011
• Cash flow from operations of NOK 623 million (NOK 280 million)
• Continuing strong growth in Sweden, with organic growth of 9%
Key figures for 2011 (comparable pro forma figures for 2010)
• Operating revenue of NOK 12,841 million (NOK 12,434 million)
• EBITA of NOK 783 million (NOK 552 million)
• Cash flow from operations of NOK 676 million (NOK 565 million)
• CAPEX of NOK 439 million (NOK 513 million)
• Order backlog at the close of 2011 was NOK 16.2 billion. New contracts totalling NOK 10 billion were signed in 2011
• Earnings per share NOK 0.86 (NOK -1.34)
• The board proposes that the Annual General Meeeting should approve a dividend of NOK 0.35 per share for 2011
Fourth quarter 2011 figures for EDB ErgoGroup's business areas
IT Operations: The IT Operations business area reported operating revenues of NOK 1,570 million for the fourth quarter of 2011 as compared to NOK 1,603 million in the fourth quarter of 2010. EBITA was NOK 81 million in the fourth quarter of 2011 as compared to NOK 80 million in the fourth quarter of 2010.
Solutions: The Solutions business area reported operating revenues of NOK 1,173 million as compared to pro forma NOK 1,056 million in the fourth quarter of 2010. EBITA was NOK 106 million in the fourth quarter of 2011 as compared to pro forma NOK 15 million in the fourth quarter of 2010.
Consulting: The Consulting business area reported operating revenues of NOK 1,026 million for the fourth quarter of 2011 as compared to NOK 1,020 million in the fourth quarter of 2010. EBITA was NOK 75 million in the fourth quarter of 2011 as compared to NOK 75 million in the fourth quarter of 2010.
Performance in Sweden in the fourth quarter
Revenue in Sweden (including Finland) in the fourth quarter of 2011 was NOK 1,021 million, equivalent to organic growth of 9% from NOK 913 million in the fourth quarter of 2010. EBITA was NOK 95 million as compared to NOK 73 million in the fourth quarter of 2010.
The IT services market in Norway and Sweden showed a positive trend in 2011. At the start of 2012, there is still a risk that the turbulence affecting the financial markets and the downgraded forecasts for GDP growth in a number of countries may have an adverse effect on growth in demand for IT services. Expectations on the outlook for GDP growth in Sweden have been steadily downgraded, and it is uncertain what effect this might have on the market for investment in IT and outsourcing in the future.
Experience from the downturn in 2008/2009 indicates that the effect of a general downturn in the market also affects the IT market, but with some delay. In addition, slower economic growth can be expected to have a larger and more immediate effect on the SME market segments in Norway and Sweden where export-based industrial customers are directly exposed to weaker international demand.
In the Swedish market, the company expects to see continuing good demand from the public sector and the bank and finance sector, driven by the company's broad portfolio of services and solutions. In the Norwegian market, EDB ErgoGroup is well positioned for growth in the consulting and solutions area. The company expects to see continuing good growth in outsourcing for the SME segment, and a positive trend for sales of additional services to the large customer segment of the market that will help to offset the decline in revenue caused by contractually agreed price reductions in the large customer segment of the Norwegian outsourcing market.
EDB ErgoGroup expects moderate growth in 2012.
The Board expects a continuing positive trend for profitability in 2012, with improved cash flow. The company is placing a high priority on work to realise the synergy objectives that it has previously announced
The Board is also focusing on ensuring that the integration of the former EDB and ErgoGroup is carried out in a way that properly takes into account the interests of its customers, employees and shareholders, while also ensuring high quality standards at all stages of the delivery chain. Establishing a unified identity for the company by the launch of a new name and brand during the course of the first quarter of 2012 is expected to have a positive effect, externally as well as internally.