EDB - New reporting format from 2009

(Oslo, 20 March 2009) In order to ensure uniform reporting to the market that is consistent with the way the group is organised, EDB Business Partner ASA will report on the basis of three business areas in 2009 (IT Operations, Application Services and Solutions). In order to provide comparable prior-year figures, the company has prepared pro forma figures for 2008 using the new reporting structure, as explained below.

The rationale for simplifying the reporting structure is based on the integration plan that EDB announced at the time of the acquisition of IS Partner on 1 February 2008. The first phase of the integration plan, which involved assuming operational control, shared use of premises and unified marketing, has now been completed. The group started work from the start of this year on the second phase, which involves merging IS Partner AS with EDB Business Partner Norge AS and reporting its activities as part of IT Operations and Application Services. In accordance with the plans announced previously, this closer integration will ensure that the synergy benefits are fully realised. At the time of the acquisition of IS Partner, EDB indicated that synergy benefits would total NOK 110 million, and that it would cost NOK 40 million to realise these benefits. IS Partner achieved higher revenue than expected in 2008, and the synergy benefits realised were close to NOK 40 million. The costs associated with realising the remaining synergies will be incurred in 2009, and the synergy benefits are expected to have their full effect on earnings over the course of 2010. 
 
 
IT Operations:
The new business area IT Operations comprises network services, operation of infrastructure and applications, security services and user support, as well as electronic business support services such as invoice management, payment services and messaging as well as printing services. The activities of the IT Operations business area cover most industries and sectors, and it operates in Norway and Sweden.
 
Pro forma figures for IT Operations including the operating services division of the former IS Partner AS:
 
 
Additional information for the consolidated business area:
  • Capex in 2008 totalled NOK 281 million, equivalent to 6.1% of the business area's revenue.
  • The order backlog at the start of 2009 was NOK 9,295 million.
  • The consolidated business area recorded a positive contribution to earnings in the order of NOK 40 million in 2008 in connection with the Yara demerger project and the StatoilHydro merger project.
  • In connection with the acquisition of IS Partner, EDB announced that normalised EBITA for the business acquired would be in the range 6-8%.
  • Of the total synergy benefits arising from the integration of IS Partner, it is expected that the major part of the benefits will relate to the IT Operations business area.
  • IT Operations is affected by the cancellation of deliveries to the City of Oslo in the order of NOK 40-50 million annually, as announced in a separate stock exchange announcement on 26 January 2009.
  • The contractual structure used by IS Partner's operating services division does not provide for automatic annual price reductions in the way that IT Operations has agreed with certain of the business area's other customers.
 
Application Services:
EDB is bringing together all the group's consultants in a single business area - Application Services. This means that the consulting division of IS Partner transfers to Application Services. In order to ensure an optimal balance between Nordic and global resources in customer deliveries, the group's activities in India and the Ukraine will be part of Application Services with effect from 2009. Following these changes, Application Services comprises 2,996 consultants with extensive expertise in SAP, Microsoft, Oracle and IBM technology, as well as in project management, systems development and integration, in addition to expertise in customising and implementing standard systems. The business area operates from various locations in Norway, Sweden and Denmark, as well as locations in India and the Ukraine.
 
The pro forma figures include the consulting division of IS Partner, as well as Span Systems in India and Miratech and Infopulse in the Ukraine.
 
 
Additional information for the consolidated business area:
  • The order backlog at the start of 2009 was NOK 266 million. The company only reports contractual orders in its order backlog. The structure of the business area's contracts with its customers means that the order backlog only represents a minor proportion of its total revenue.
  • Of the total synergy benefits arising from the integration of IS Partner, only a minor element is expected to relate to the Application Services business area, but co-ordinating the work of consultants will pave the way for more flexible resource management that will allow it to make better use of in-house resources relative to using hired-in consultants.
 
Solutions
The Solutions business area offers a complete range of software and consulting services for the Nordic banking and finance sector. The business area also serves the Norwegian public sector with solutions for Norwegian municipalities, health authorities and national public sector entities. In Sweden the business area also supplies document handling solutions to public sector entities.
 
This business area is not affected by the consolidation of IS Partner, and the figures reported below are therefore the actual figures as reported in 2008.
 
 
 
Additional information for the business area
  • Capex in 2008 totalled NOK 12 million.
  • The order backlog at the start of 2009 was NOK 2,378 million.
 
Appendix:
 
 
 
Contact person:
Kristian Kuvaas Johansen, EVP and CFO. Tel: +47 476 03 334

EDB Business Partner Proforma 2008