The Application Services business area reported 16% growth in revenue in the second quarter. The business areas Solutions and IT Operations reported growth of 5% and 1% respectively.

 

"Following the acquisitions we made in the first six months, EDB now has a better balance of revenue which more closely reflects the make up of demand in the IT services market. It is particularly pleasing to see profitability in Sweden improving as planned, and the application services businesses we have acquired are reporting good growth in revenue and profitability", comments Endre Rangnes, CEO of EDB Business Partner. Sweden now accounts for 25% of the EDB group's total revenue.

 

EDB enjoyed a strong order inflow in the second quarter, and signed new contracts worth NOK 850 million. The total order backlog now stands at NOK 11.7 billion.

 

EDB Business Partner reports operating revenue for the second quarter of 2006 of NOK 1,523 million, representing growth of 22%. Revenue from the group's Swedish activities grew strongly thanks to sound organic growth and consolidation of the recently acquired units Guide Konsult AB and Drop IT AB. The Swedish activities accounted for 25% of the group's total revenue in the second quarter.

 

The group reports operating profit before intangible asset amortisation (EBITA) of NOK 138 million for the second quarter of 2006. The group's EBITA margin for the quarter was 9.1%. EDB Business Partner's pre-tax profit for the second quarter of 2006 was NOK 94 million compared to NOK 87 million in the same quarter last year. Earnings per share (EPS) increased by 13% to NOK 0.72. EDB reported cash from operations for the second quarter of 2005 of NOK 5 million. In the same quarter this year, cash from operations increased to NOK 140 million.

 

The IT Operations business area reported 1% growth in second quarter revenue to NOK 974 million. Revenue for the Solutions business area was NOK 322 million, representing growth of 5%. Application Services reported revenue of NOK 249 million, up by 16% from proforma revenue for the second quarter of 2005.

 

The Nordic IT services market continues to develop positively, especially for application services. Demand for industry-specific solutions also shows positive growth. The outsourcing market shows a flatter trend.

 

EDB reports a performance from its IT Operations business area that is in line with the overall market for outsourcing, and the company therefore places great emphasis on cost saving measures to ensure that long-term profitability is in line with the reported profitability in recent years. In April 2006, EDB therefore announced a program to reduce the group's fixed costs by NOK 300 million over the course of a three-year period. This program includes premises costs, purchasing and other operating costs. In addition to this program, the Company will in 3rd quarter 2006 implement new measures to reduce personnel-related costs in IT Operations Norway and related support functions that will come into effect from the fourth quarter of 2006. The target for this program is to achieve annual cost savings in the order of NOK 100 million and is expected to reduce the workforce with 150 to 200 employees. EDB will provide further details of this personnel-related program once the preparations are complete and the necessary decisions have been made.

 

The measures announced for the Swedish activities in the fourth quarter of last year are producing the intended results, and the EBITA margin reported by this part of the business area is showing improvement. EDB sees a number of opportunities that will make a positive contribution to this business area's revenues towards the end of this year and into 2007.

 

EDB expects continuing improvement in market conditions for the Solutions business area, and the company's products and services are well positioned to take advantage of this expected growth. Over the last three years EDB has placed particular emphasis on sales of the company's bank and finance solutions to Nordic and international banks. This emphasis has helped to maintain good organic growth for this business area.

 

The Application Services business area reports good organic growth and profitability, and is developing in line with the company's expectations. The billable utilisation of consultants in the second quarter was higher than in the first quarter, and the current high level is expected to continue in the second half of the year. The seasonal pattern of holiday leave will cause a lower level of activity in the third quarter, but this will be offset by a high level of activity in the fourth quarter.

 

EDB is targeting the development of cross-selling opportunities across its business areas, and notes that the new units are helping to strengthen the group's overall competitive position. This provides a solid basis to proceed with the company's ambitions for revenues of NOK 8 billion by the end of 2008 - and with good profitability.

 

 

Please see the attached second quarter report for more detailed financial information.

The second quarter 2006 presentation can be downloaded from the following link (PDF): www.wdb.com.

 

 

Any enquires may be addressed to:
Endre Rangnes, CEO. Tel: + 47 22 52 80 80
Tore Valderhaug, Executive Vice President and CFO. Tel: + 47 995 60 925
Geir Remman, Executive Vice President, Corporate Communications.
Tel: +47 970 55 017

 

EDB Business Partner is Norway's largest IT company, with turnover of NOK 4.8 billion in 2005. The group has 3,900 employees of which 1,400 are in Sweden. EDB Business Partner is listed on Oslo Børs with the ticker code EDBASA. For further information see www.edb.com