EDB reports revenue growth of 25% for the second quarter of 2008

(Oslo, 17 July 2008) EDB increased its operating revenue by 25% to NOK 2,034 million for the second quarter of 2008. The group's operating profit before intangible asset amortisation (EBITA) improved by 23%, up from NOK 155 million to NOK 191 million. The EDB group's order backlog at the end of the first six months totalled NOK 13.7 billion.

"I am very pleased that EDB can report strong growth in both earnings and revenue for the second quarter. We believe that these results represent the best-ever half year for EDB. In order to ensure that we maintain good margins, and to further strengthen our activities in the future, we are now intensifying our focus on Global Sourcing through our companies in India and the Ukraine. At the same time, we are carefully monitoring the on-going consolidation of the Nordic IT services market, and will continue to play an active role in this area", comments Endre Rangnes, CEO of EDB.
 
Highlights of the second quarter of 2008
  • Operating revenue of NOK 2,034 million (NOK 1,621 million), representing growth of 25%.
  • Operating profit before intangible asset amortisation (EBITA) of NOK 191 million (NOK 155 million), representing growth of 23%.
  • Cash flow from operations before non-recurring items of NOK 153 million in the second quarter of 2008, as compared to NOK 158 million in the second quarter of 2007.
  • Earnings per share before non-recurring items of NOK 0.71 as compared to NOK 0.74 for the second quarter of 2007.
  • EDB signed new contracts in the second quarter representing total contract value of NOK 1 billion.
 
Highlights of the first six months of 2008
  • Operating revenue of NOK 3,872 million (NOK 3,205 million), representing an increase of 21%.
  • Operating profit before intangible asset amortisation (EBITA) of NOK 364 million (NOK 297 million), representing growth of 22%. 
  • EDB's order backlog totalled NOK 13.7 billion at the end of the first six months.
  • Pre-tax profit of NOK 149 million as compared to NOK 191 million for the first six months of 2007.
  • Earnings per share before non-recurring items of NOK 1.44 as compared to NOK 1.48 for the first six months of 2007.
Results from the business areas for the second quarter off 2008
IT Operations: The business area reports revenue of NOK 916 million as compared to NOK 1,002 million for the same quarter of 2007. EBITA was NOK 73 million for the second quarter of 2008 as compared to NOK 84 million for the second quarter of 2007. EBITA margin for the quarter was 8.0% as compared to 8.4% in the second quarter of 2007. The reduction in revenue is mainly due to the absence of revenue from the former contract with Apoteket in Sweden, together with a low level of activity in the market for major outsourcing contracts over recent quarters. The business area has intensified its focus on measures to improve efficiency in order to ensure that it can maintain sound profitability in the future.

Solutions: The business area reports revenue of NOK 364 million for the second quarter of 2008, as compared to NOK 361 million for the same period last year. This is equivalent to revenue growth of 1% for the quarter. The Bank & Finance industry vertical generated organic growth of 6% in the second quarter, while the Public Sector vertical reported a decline as a result of sizeable sales in the second quarter of 2007 in relation to elections. EBITA for the second quarter of 2008 was NOK 55 million as compared to NOK 56 million for the same quarter of 2007. EBITA margin for the quarter was 15.1% as compared to 15.6% for the second quarter of 2007.
 
Application Services: The business area reports revenue of NOK 358 million for the second quarter of 2008 as compared to NOK 306 million for the second quarter of 2007. Revenue was up by 17% in the quarter. EBITA was NOK 43 million for the second quarter of 2008 as compared to NOK 33 million in the same quarter of 2007. This represents an EBITA margin of 11.9%, up from 10.9% in the second quarter of 2007.
 
Global Sourcing: The business area reports revenue of NOK 47 million for the second quarter of 2008 as compared to proforma NOK 33 million for the second quarter of 2007. Revenue growth for the quarter was 44% and, and reflects increased activity with EDB's business areas as well as higher capacity utilisation for other customers. EBITA for the second quarter of 2008 was a loss of NOK 6 million, after charging Nordic offshore costs of NOK 11 million. On a stand-alone basis, with EDB as owner, the companies in this business area show good profitability.
 
IS Partner: The business area reports revenue of NOK 420 million for the second quarter of 2008, as compared to NOK 414 million for the same period in 2007. EBITA for the second quarter of 2008 was NOK 46 million. Proforma EBITA for the second quarter of 2007 was NOK 70 million, of which NOK 35 million was extraordinary income. EBITA margin for the second quarter was 11% as compared to 16.8% for the same period last year.
 
Consolidation of the IT services market
EDB has assumed an active role in the ongoing consolidation of the Nordic IT services market. In this connection, the company has carefully followed the bidding process for TietoEnator, and has analysed the possibility of combining the two companies. The work carried out has confirmed EDB's positive approach to further consolidation in this market, and the company continue to see this kind of strategic opportunity as an attractive alternative. As part of this process, EDB has incurred costs in relation to detailed financial and legal evaluation. The total non-recurring costs incurred amount to NOK 35 million, and were charged to the profit and loss account in full in the second quarter of 2008.
 
Future prospects
The Nordic IT services market showed growth in the order of 4-5% in the first six months of 2008, in line with forecasts at the beginning of the year. Customers continue to show a willingness to invest, and EDB expects market growth to continue at the same level for the second half of 2008. The prospect of slower global economic growth has caused the research firms IDC and Gartner to make some minor downward adjustments to their forecasts for market growth from 2009 onwards. EDB is monitoring the situation closely, and pays particular attention to the company's readiness to adapt rapidly to changes in market conditions if circumstances so require.
 
 
Any enquires may be addressed to:
Endre Rangnes, CEO. Tel: + 47 22 77 21 01
Kristian Kuvaas Johansen, EVP and CFO. Tel: + 47 476 03 334
Geir Remman, EVP, Corporate Communications. Tel: +47 970 55 017
 
 
EDB Business Partner is one of the leading IT groups in the Nordic region. The company offers solutions for the full range of business-critical IT services. EDB aims to be a close and attentive partner that leverages its deep industry knowledge and international capabilities to help its customers realise the full potential of IT. The company has local presence in 13 countries, 6,000 employees and an annual turnover of NOK 8 billion. EDB Business Partner is listed on the Oslo Stock Exchange.
 

2nd quarter 2008
Presentation of 2nd quarter 2008