EDB generated a record inflow of new contract signings of NOK 5 billion in the first quarter of 2009, and this caused a high level of sales costs in the quarter. The Nordic IT services market has successively weakened over the course of the first quarter.

 

"We are not satisfied with the first quarter earnings, and this together with the worsening market situation has caused us to launch an improvement program. One aspect of this program is a reduction of NOK 400 million in annual costs, of which personnel-related costs will account for NOK 150 million", comments Endre Rangnes, CEO of EDB.

 

Cash from operations was positive in the first quarter of 2009 at NOK 19 million as compared to negative cash flow of NOK 126 million in the first quarter of 2008. CAPEX reduced to NOK 39 million as compared to NOK 61 million in the first quarter of 2008.

 

EDB's liquidity reserves totalled NOK 1,284 million at 31 March 2009, in line with the company's position at the end of the fourth quarter of 2008. Interest rates continued to fall in the first quarter, which will lead to lower financing costs for EDB in future quarters.

 

"EDB is focusing on cash flow, cutting CAPEX and reducing interest-bearing liabilities. We intend to continue our restrictive policy on investment spending for some time to come", explains Endre Rangnes.

 

• New agreements signed with customers including DnB NOR, a group of four Norwegian banks, Posten AB and Storebrand Bank helped to increase the value of contracts signed in the quarter to NOK 5 billion.
• All-time high order backlog representing NOK 14.3 billion of secure future revenue.
• Operating revenues of NOK 1,936 million as compared to NOK 1,838 million in the same quarter of 2008, an increase of 5%.
• Operating profit before intangible asset amortisation (EBITA) of NOK 135 million in the first quarter of 2009 as compared to NOK 173 million in the same quarter of 2008.
• Operating profit (EBIT) for the first quarter of 2009 of NOK 105 million, as compared to NOK 143 million for the first quarter of 2008.
• Post-tax profit of NOK 46 million for the first quarter of 2009 as compared to NOK 69 million for the same period in 2008.

Starting with the first quarter of 2009, EDB now reports on the basis of three business areas: IT Operations, Application Services and Solutions. This involves changes in the basis for reporting in respect of IT Operations and Application Services, and comparable figures for these business areas have therefore been restated on a pro forma basis.

 

IT Operations: The business area reports revenue of NOK 1,108 million for the first quarter of 2009, equivalent to a reduction of 1% from the same quarter in the previous year. Operating profit before intangible asset amortisation (EBITA) was NOK 74 million for the first quarter of 2009 as compared to pro forma NOK 101 million for the first quarter of 2008. EBITA margin for the quarter was 6.7% as compared to 9.0% for the first quarter of 2008.

Application Services: The business area reports revenue of NOK 537 million for the first quarter of 2009, as compared to pro forma NOK 548 million for the first quarter of 2008. Operating profit before intangible asset amortisation (EBITA) was NOK 38 million for the first quarter of 2009, as compared to NOK 51 million for the same period in the previous year. EBITA margin was 7.1%, down from 9.3% in the first quarter of 2008. 

Solutions: The business area reports revenue of NOK 374 million for the first quarter of 2009, as compared to NOK 357 million for the same period in the previous year. This represents an increase of 5% for the quarter. Operating profit before intangible asset amortisation (EBITA) was NOK 48 million in the first quarter of 2009, as compared to NOK 49 million for the same period in 2008. EBITA margin for the quarter was 12.7% as compared to 13.7% for the first quarter of 2008.

 

Conditions in the Nordic IT services market successively weakened over the course of the first quarter of 2009, particularly in the consulting area. Market conditions are expected to remain weak for some time to come, and this is reflected in a lower capacity utilisation and downward pressure on prices for services in certain areas. The market for outsourcing is showing an increase in activity, and the market research company IDC expects this segment to show growth in the future. Based on the current market situation, EDB has implemented measures to reduce the level of costs in all business areas.

 

The Board is monitoring the market closely, and the company will implement further measures if conditions so require.

 

 

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