Profit margin (EBITA margin) for the quarter was -4.5% as compared to +7% for the same quarter in 2002. Non-recurring items totalled NOK 126 million for the quarter. Underlying profitability has therefore improved, with an EBITA margin of 8%. All the group's business areas have reported a successive improvement in underlying margin over the first three quarters of this year. Cash from operations was NOK 112 million as compared to NOK 150 million in the same quarter last year and NOK 45 million in the second quarter of this year. The third quarter produced a loss after tax of NOK 79 million as compared to a profit of NOK 5 million for the same period last year. After adjusting for non-recurring items, the group shows an improvement in profit from the same time last year.

 

Third quarter turnover confirms that market conditions are stable. The quarter's results reflect a group implementing changes and are affected by the results of the internal review. The 'clean up' task has now been completed, and if provisions and restructuring costs are excluded profitability shows an improving trend. "I am still not satisfied with these results. The group has the potential for better earnings than we currently achieve. However the task of refocusing the group is progressing at a rapid pace, and the changes we are making are well received by both current and new customers. We have built up strong momentum and are heading in the right direction with this task", comments Endre Rangnes, CEO.

 

Measures were launched in the third quarter to refocus the Bank & Finance business area, and are proceeding according to plan. Provisions totalling NOK 89 million were recognised in the third quarter in relation to changes in this business area. The measures implemented include a reduction in headcount, and this will have an impact on costs from 1 November.

 

During the third quarter the group reviewed its future office space requirements and its property lease commitments. This showed that the group is committed to lease more space than it requires, and a provision of NOK 28 million has been recognised in addition to the provisions previously announced. A further provision of NOK 9 million was made for other non-recurring costs relating to the process of change in the group.

 

The group's management, board and auditors have carried out a thorough review of goodwill items. This review concluded that, given the company's expectations of future turnover, there is no reason to write down goodwill. "The group's liquidity reserves are fully sufficient for our current operations", states Endre Rangnes.

 

At today's presentation of the third quarter results the CEO also comments on the group's long-term growth prospects as follows: "We have completed our review of the group, and have implemented a number of changes. The task of refocusing the Bank & Finance business area is well underway, and we have implemented measures to improve the group's market orientation and make it more effective. These steps will strengthen EDB's market position and make us more competitive", comments Endre Rangnes. "The executive management team has started work on identifying growth opportunities in the market in order to realise the potential that this stronger competitive position will create. This process is part of our stated strategy, and will proceed over the next few quarters in parallel with the process of change currently being implemented", adds Mr Rangnes.

 

More detailed financial information can be found in the interim report provided as an appendix to this announcement.