EDB Business Partner Company update - Carnegie
Oslo 22 November, 2006 CEO Endre Rangnes / CFO Tore Valderhaug
EDB Business Partner
EDB – COMPANY UPDATE AGENDA EDB status & strategy IT Services Market Trends EDB Financials Summary & outlook
EDB Business Partner
Slide 2
FAST START 4Q 2006
Customer
Country
Gjensidige
Norway
150
LF Bank
Sweden
50
4 Banks
UK
25
Brødrene Dahl
Norway
21
SEB
Sweden
20
Nordea
Norway
15
Norske Skog
Norway
10
Posten
Sweden
10
Total
EDB Business Partner
NOK million
301
Slide 3
HIGHLIGHTS GROUP Key figures YTD `06 – Revenue 4,3 bn (+18% y/y) – EBITA 9,1% – Cost-reduction programs on track
Acquisitions contributing to further growth – EPS contribution 2006 of approx NOK 0.45/share
Successful customer projects – Telenor Ultra
Oslo Stockholm
– DNB NOR ITIP
Nordic leadership No.1 in Norway and No. 5 in Sweden No. 2 in IT Operations Nordics No. 4 in Project Services Nordics EDB Business Partner
Göteborg
Köbenhavn
Malmö
Slide 4
WELL DEFINED STRATEGY
Large customer base – expanding Nordic and global firms/ Cross-selling: ORGANIC GROWTH Nordic & European Building Application services
Prepared to drive the structural agenda: STRUCTURAL GROWTH
Building Solutions portfolio
Nordic consolidation
Establishing critical mass in IT-Operations
2004 EDB Business Partner
2005
2006
2007
2008 Slide 5
CLEAR OVERALL STRATEGIC AMBITIONS Top line profitable organic growth NOK 8 billion in revenue in 2008 Growth through larger outsourcing contracts Larger geographical penetration on Solutions
1
Prepared to drive the structural agenda Selected acquisitions within strategic focus Participate in structural discussions
2
Cost decrease Cost leader in operational efficiency Significant reduction in overhead cost
3 4
Customer satisfaction Continuously improve customer satisfaction
Employee satisfaction
5 EDB Business Partner
Attract, develop and retain good people Improve employee satisfaction
Slide 6
WELL DEFINED GO-TO-MARKET-MODEL
Industry specific solutions
Bank and Finance
Public sector
Trade and Industry
Telecom
IT Consulting and Applications Services General services Business Support Services, IT Operations and Network Services
EDB Business Partner
Slide 7
LARGE NORDIC CUSTOMERS AS BASIS FOR ORGANIC GROWTH
EDB Business Partner
Slide 8
REVENUE DISTRIBUTION
By business area
Solutions 20 %
Appl Services 16 %
By geography
By industry
Banking and finance
Sw eden 21 %
Public sector
Retail and industry
IT Operations 64 %
Telecom Norw ay 79 %
0
20
Per 30.09.2006
EDB Business Partner
40
60
Per 30.09.2005
Slide 9
READY FOR FURTHER EXPANSION IN SWEDEN Revenue SEK 1,1 bn (+100% y/y) – IT Operations: 53% – Solutions and Application Services 47%
Profitability at Group level SEK 600 million in new signings – LF Bank, SEB, Samhall
Strong performance in acquired units Guide on Top3 in new Survey (IT-Barometeren) – Strategic IT Services – Implementation of IT Projects – System development
Consolidation of EDB locations in Stockholm
EDB Business Partner
Slide 10
EXTENDED FOOTPRINT IN NORDIC, BALTIC AND UK Asset management
Card solutions
Card solutions, Internet banking components
Internet banking components, price & product management
Card solutions, automated customer information handling
Corporate lending system
Credit process automation solution Internet and office process solutions
EDB Business Partner
Banking office process automation solution
Slide 11
IT Services Market Key figures and drivers for growth
EDB Business Partner
KEY FIGURES NORDIC IT SERVICES MARKET Total market NOK 110 billion in 2006
IT Services Market
IT services growth 5 – 6 % – Strong demand and price increase in Project services (Solutions & Appl. Svcs)
20 % 36 %
– Strong demand for SW components and related Svcs
Digital users drives development – Customer and public oriented solutions
44 %
Project services Outsourcing Support services
EDB Business Partner
Slide 13
EXPANDING SCALE OF OFFSHORING/ NEARSHORING Western Europe IT Spending – – – –
1% of IT spending off-shored ATOS/CMGLOGICA/CAPGEMINI; 3-7% of HC off-shored IBM/Accenture; 12-16% of HC off-shored Growing 17% CAGR
EDB with experience from initial projects – IT Operations – Bank and Finance – Application Services
EDB - securing growth and profitability – Ensures access to resources – Contributes to greater competitiveness
EDB - targets 2007 – Increase customer offering – Establishing captive unit
EDB Business Partner
Slide 14
2005
2006
CONSOLIDATION OF NORDIC IT MARKET CONTINUES + + +
2003
2004
+
EDB Business Partner
+ + + +
Scandinavian IT Group Novo Group Slide 15
Per 3 Quarter 2006 Highlights and Key Figures
EDB Business Partner
KEY FIGURES Q3 2006 – GROUP
(NOK million)
Q3 2006
Q3 2005
Operating revenue Operating costs Operating profit before amortisation (EBITA)
1,370 1,248 122
1,163 1,041 122
EBITA %
8.9 %
10.5 %
98
97
EBIT before non-recurring items Non-recurring items
-144 -60
91
Cash flow from operations Operational investments (CAPEX)
120 66
196 105
0.63 3,928
0.69 2,707
EDB Business Partner
18% 20% 0%
1%
-
Profit before tax
EPS before non-recurring items (NOK) No. of employees
Y/Y
-8%
Slide 17
KEY FIGURES YTD SEPTEMBER 2006 – GROUP
(NOK million)
30/09/2006
30/09/2005
Operating revenue Operating costs Operating profit before amortisation (EBITA)
4,234 3,851 383
3,589 3,224 365
EBITA %
9.1 %
10.2 %
EBIT before non-recurring items
313
281
Non-recurring costs
144
-
Profit before tax
128
247
Cash flow from operations Operational investments (CAPEX)
316 210
259 256
2.09 3,928
1.84 2,707
EPS before non-recurring items (NOK) No. of employees
EDB Business Partner
Y/Y 18% 19% 5%
11%
14%
Slide 18
CASH FLOW FROM OPERATIONS – GROUP
NOK mill 700 600 500 400 300 200 100
2004 2005 2006
0 31.03.2006
EDB Business Partner
30.06.2006
30.09.2006
31/12/2006
Slide 19
ORDER BACKLOG – NOK 11.4 BILLION
ORDER BACKLOG DISTRIBUTED Total order backlog
2006*
2007
2008
2009
Later
IT Operations
9,700
869
2,937
2,692
1,803
1,399
Solutions
1,528
213
604
352
231
128
145
130
15
11,373
1,212
3,556
3,043
2,034
1,528
11%
31%
27%
18%
13%
NOK million
Application Services Total order backlog % of total * Includes Q4
EDB Business Partner
Slide 20
KEY FIGURES – IT OPERATIONS - YTD
(NOK million)
30/09/2006 30/09/2005
Y/Y
Operating revenue
2,854
2,826
1%
Cost of goods sold Salaries and related costs Ordinary depreciation Other operating costs Total operating costs
1,034 898 207 471 2,610
1,012 845 213 502 2,572
1%
Operating profit before amortisation EBITA %
244 8.6 %
254 9.0 %
Operational investments (CAPEX) No. of employees
174 1,897
225 1,687
EDB Business Partner
-4%
Slide 21
KEY FIGURES – SOLUTIONS - YTD
(NOK million)
30/09/2006
30/09/2005
Y/Y
Operating revenue
896
825
9%
Costs of goods sold Salaries and related costs Ordinary depreciation Other operating costs Total operating costs
110 393 9 249 760
70 379 5 219 673
13%
Operating profit before amortisation (EBITA) EBITA % Operational investments (CAPEX) No. of employees
EDB Business Partner
136 15.2 % 8 851
152 18.5 %
-11%
3 752
Slide 22
KEY FIGURES – APPLICATION SERVICES - YTD
(NOK million)
30/09/2006 30.09.2005*
Y/Y
Operating revenue
562
492
14%
Costs of goods sold Salaries and related costs Ordinary depreciation Other operating costs Total operating costs
41 376 1 93 510
47 333 1 90 472
8%
51 9.2 %
20 4.1 %
Operating profit before amortisation (EBITA) EBITA % Operational investments (CAPEX) No. of employees
4 972
156%
-
*Proforma
EDB Business Partner
Slide 23
APPLICATION SERVICES PRO FORMA REVENUES AND EBITA MARGIN NOK mill
Revenues
3Q06; Organic growth 12 %
300 250 200
YTD06; Organic growth 11 %
150 100 50 2005 2006
0 Q1
Q2
Q3
Q4
EBITA margin 16 % 14 % 12 % 10 % 8% 6% 4% 2%
2005
0%
2006
Q1
EDB Business Partner
Q2
Q3
Q4
Slide 24
Summary and Outlook EDB Business Partner
POSITIONED FOR GROWTH Lowering cost-base – NOK 100 million lower cost-base in IT-Operations – NOK 300 million cost-reduction programme (Group) on track – Off-/Near-shoring initiatives
Regained financial strength Q4 '06 and 2007 backlog; NOK 4.8 billion Global roll-out of EDB Financial Suite EDB Sweden on track – ready for expansion IT Market consolidation continuous
EDB Business Partner
Slide 26
