EDB affected by continuing weakness in the IT services market

(Oslo, 15 July 2010) EDB Business Partner reports revenue of NOK 1,809 million in the second quarter of 2010 as compared to NOK 1,923 million in the same quarter of 2009. The group's operating profit before intangible asset amortisation (EBITA) for the second quarter of 2010 was NOK 127 million, as compared to NOK 151 million for the second quarter in 2009. EDB signed new contracts with total contract value of NOK 3.1 billion in the second quarter as compared to new signings of NOK 1.7 billion in the same quarter last year.

"EDB is still being affected by weak conditions in the IT services market, especially in the industrial segment. In view of this, it is pleasing that we have achieved growth in turnover in most other segments. The weak market conditions, combined with price pressure in certain segments, make it necessary to reduce costs in order to strengthen profitability", comments Acting CEO John-Arne Haugerud.

"We have received positive feedback from customers, employees and the market on the plans to merge with ErgoGroup. Our preparations are well under way, and our objective is to establish a leading Nordic IT vendor with the capacity for accelerated organic growth and financial strength. A small number of employees are working on planning the integration, but our main priority continues to be our operational focus on customers, deliveries and sales", comments Acting CEO John-Arne Haugerud.

Combination of EDB and ErgoGroup
The boards of directors of EDB Business Partner ASA and ErgoGroup AS recommended to their respective shareholders on 7 June 2010 that EDB and ErgoGroup should merge to form a leading Nordic IT company, which would have the capacity for faster organic growth and the financial strength to exploit strategic and structured opportunities.

The merger plans were approved by extraordinary general meetings of both companies held on 8 July 2010. The merger is conditional on approval from the competition authorities, which is expected to be given towards the end of the third quarter of 2010, with the latest date for approval of the merger being 3 December 2010. The planning process confirms that we are at the upper end of the NOK 250-350 million range for synergy benefits that we have already indicated. Work on realising these synergies will start once the merger is formally approved by the competition authorities.

NOK 200 million cost program launched
Over the course of the third quarter, EDB will implement a cost program that will reduce the group's costs in the order of NOK 200 million annually, with the full effect expected from 2011 onwards. The costs associated with the implementation of the cost program will be charged to the accounts as non-recurring items totalling NOK 132 million, of which NOK 12 million has been recognised in the second quarter accounts and the balance will be recognised in the third quarter accounts.

The measures to be implemented include streamlining the group's international office structure as a result of the cessation of some deliveries to the industrial customer segment, a reduction in central staff costs in connection with simplifying the corporate structure of the Consulting business area and better capacity utilisation in the Swedish activities of the IT Operations business area. The company will relocate part of its organisation in the Oslo region in the third quarter following the normal expiry of property leases. The group will offer employees in Norway in the age group 62-67 the opportunity to retire with the contractual early-retirement pension (AFP) combined with a supplementary pension provided by EDB for the period to normal retirement age.

Operating revenue NOK 1,809 million (NOK 1,923 million)
EBITA NOK 127 million (NOK 151 million)
Cash flow from operations of NOK 160 million (NOK 168 million)
CAPEX NOK 40 million (NOK 59 million)
New contracts NOK 3.1 billion (NOK 1.7 billion)
EDB and ErgoGroup announce a merger to create a leading Nordic IT company
New cost program launched to improve profitability

IT Operations: The IT Operations business area reports revenue of NOK 1,049 million for the second quarter of 2010 as compared to proforma NOK 1,101 million for the same quarter in 2009. EBITA for the quarter was NOK 75 million, as compared to proforma NOK 91 million in the second quarter of 2009.

Solutions: The business area reports revenue of NOK 414 million for the second quarter of 2010 as compared to NOK 385 million for the same quarter in 2009. EBITA for the second quarter was NOK 55 million, in line with the second quarter of 2009.

Consulting: The business area reports revenue of NOK 457 million for the second quarter of 2010 as compared to proforma NOK 495 million for the same quarter in 2009. EBITA for the second quarter was NOK 24 million, as compared to NOK 31 million in the second quarter of 2009.

Future prospects
The Nordic IT services market showed a marked decline in 2009 due to reduced demand and pressure on prices. Customers remain reluctant to commit to new investment spending, and continuing downward pressure on prices in the outsourcing segment meant that the IT services market again showed an overall decline in the first six months of 2010. There are, however, clear signs of growth in a number of segments, and this has caused the decline in demand to level off.

The market research companies IDC and Gartner expect an improving trend in the IT services market during 2010, with the prospect of growth in the second half of the year.

In view of the continuing uncertain market situation, EDB has launched further cost saving measures. The Board of EDB is maintaining a strong focus on ensuring that the group continues to implement the measures necessary to maintain satisfactory profitability and competiveness.

Any enquiries may be addressed to:
John-Arne Haugerud, Acting CEO. Tel: + 47 22 77 21 01
Vidar Nysæther, Acting CFO. Tel: + 47 97 08 81 61
Geir Remman, EVP, Corporate Communications. Tel: + 47 970 55 017

EDB Business Partner is a leading information technology (IT) services provider in the Nordic region. We help customers unlock substantial value from the entire IT services value chain, spanning solutions, consulting and outsourcing. The company has some 6,000 employees and reported annual turnover of around NOK 7.5 billion in 2009. EDB aims to be a close and attentive partner that combines its local expertise and deep industry knowledge with substantial international delivery capacity. EDB Business Partner ASA is listed on the Oslo Stock Exchange with ticker code EDBASA.

This information is subject of the disclosure requirements acc. to §5-12 vphl (Norwegian Securities Trading Act)