Atea — Earnings Release 2010

Apr 29, 2010

Atea Q1 2010 financial results

Highlights Q1 2010

· Revenue of MNOK 3,570.9, up 1.9% y-o-y, up

6.9% in constant currency

· EBITDA of MNOK 119.7, up 31.3%

· EBITDA margin of 3.4%, up from 2.6%

· EBIT of MNOK 76.1, up 61.3%

· Acquired four Office print/copy companies in

Sweden

· Acquired PALnet Oy, leading provider within

network and data security in Finland

· Acquired Impact Europe's subsidiaries in

Sweden and Norway (April 26)

Actual Q1 2010 vs. actual Q1 2009

Group

Group EBITDA for Q1 2010 ended at MNOK 119.7, which

is up from MNOK 91.2 in Q1 2009, representing an

improvement of 31.3%. EBITDA margin ended at 3.4%

which is up from 2.6% in the corresponding period

last year.

The improvement in EBITDA is mainly due to

improvement in product margins combined with

continued cost focus. Group revenue ended at MNOK

3,570.9, up by 1.9% y-o-y, but up 6.9% in constant

currency. Organic growth in constant currency was

4.2%. This is achieved in a market that is estimated

by IDC to grow by 1.7% in 2010 and indicates that

Atea has continued to gain market shares. Product

revenue was up as much as 9.6% in constant currency

while services revenue was down by 2.2%. Reduction in

services revenue reflects lower service activity in

January/February and 80 less consultants.

Group EBIT ended at MNOK 76.1, which is up by 61.3%

compared to corresponding period last year.

Atea entered April 26, 2010 into agreement with

Impact Europe Group AB, a leading Tandberg

videoconferencing reseller and AV solutions provider,

to acquire Impact Europe's subsidiaries in Sweden and

Norway with a total of 59 employees. The acquired

business is expected to generate revenue of MNOK

157.8 and EBITDA of MNOK 6.6 proforma in 2010. The

transaction value (enterprise value) is MNOK 40.9 and

will be paid in cash upon completion of the

transaction.

Norway

Revenue in Norway in Q1 2010 was MNOK 835.2, which is

down by 8.1% compared with Q1 2009. Product revenue

was down by 9.4% and services revenue was down by

3.5%. Q1 2009 was especially impacted by a MNOK 82.0

delivery to Kongsberg Maritime. IDC predicts annual

2010 growth y-o-y for Norway to be

-0.6% (2009: -8.3%).

EBITDA for Q1 2010 ended at MNOK 37.8, 32.7% better

compared with Q1 previous year. Cost reductions made

during 2009 have lowered the cost base for Q1 2010.

Better overall gross margin (28.8% vs. 26.2%) is

bridging the negative volume gap, thus total gross

contribution is MNOK 3.1 higher than previous year.

EBITDA margin for Q1 2010 is at a very satisfying

4.5% compared with 3.1% for Q1 previous year.

The order backlog going into Q2 is satisfying.

Several large public contracts have been won in

Norway in the beginning of 2010, i.e. the frame

agreement to deliver IT equipment and services to the

Norwegian health authorities (Helseforetakene i

Norge). The agreement is for two years with a

possibility of 1+1 more optional

years. The health authorities estimate that the

agreement will give a total of more than MNOK 400 in

yearly revenue, divided between the chosen suppliers.

Denmark

Denmark continued the strong performance and

delivered a revenue of MNOK 1,235.3, which is up

12.5% in constant currency. Product revenue is up by

17.1% while consulting and services revenue was down

by 1.3%. Excluding revenue for the recently acquired

Calamus Danmark (5 January, 2010), revenue was up by

7.0%. IDC prediction for annual 2010 growth y-o-y for

Denmark is 0.3% (2009: -9.6%), thus Denmark is still

gaining market shares. Especially the server business

has shown a strong Q1 performance. Order backlog is

strong going into Q2.

EBITDA ended at MNOK 52.4, up 32.6% in constant

currency. The EBITDA margin was 4.2% compared with

3.6% for Q1 2009. Total gross margin was slightly

below the level of previous year. However, product

margin is peaking positively. Cost base is up caused

by the acquisition of Calamus Danmark with 87

employees. Apart from that, cost level is lower.

Sweden

Revenue in Sweden in Q1 was MNOK 977.0, which is up

by 7.2% in constant currency. Product revenue was up

by 10.3%, while consulting and services revenue was

down by 1.7%. Number of billable consultants is about

70 lower compared with previous year, implying a

lower cost base. Productivity per consultant is,

however, increasing and at a satisfying level going

forward.

During Q1 (medio February) Sweden acquired four

Office print/copy companies at an enterprise value of

MNOK 38.5 and with a full year 2010 budgeted revenue

of MNOK 163.1 and an EBITDA of MNOK 12.4. Revenue

growth in Q1, excluding impacts from acquired

business, was 6.1% in constant currency, compared

with IDC predictions for annual 2010 growth for

Sweden of 3.9 % y-o-y (2009: -8.0%). Hence, Sweden is

gaining market shares. Order backlog is strong going

into Q2.

EBITDA for Q1 ended at MNOK 31.4, 52.6% above

previous year in constant currency. EBITDA margin

increased from 2.3% to 3.2%. Product margin was above

previous year, while total gross margin was below

previous year, mainly caused by the change in revenue

mix. In spite of approximately 90 additional

employees from acquired units, cost level is below Q1

2009 level, implying that cost programs have given

the expected impacts.

Finland

Revenue in Finland in Q1 ended at MNOK 440.7, which

is up by 18.9% in constant currency from Q1 2009.

Especially the product business is performing well,

showing an increase of 21.5%. Consulting and services

revenue has, however, had a drop of 14.5%.

Medio February, Finland entered into agreement to

acquire all shares in PALnet, which is a leading

supplier and service provider within information

network and data security solutions related to local

area networks. PALnet was acquired at an enterprise

value of MNOK 46.0 and with expected revenue in 2010

of MNOK 104.7 and EBITDA of MNOK 11.3.

Revenue growth in constant currency for Q1, excluding

the impacts from PALnet and A Communications

(acquired Q4 2009), is 13.6%, to be compared with IDC

predictions for annual 2010 growth for Finland of

1.4% y-o-y (2009: -8.6%). Hence Finland is gaining

market shares. The order backlog going into Q2 is

strong.

EBITDA for Finland was up from MNOK 0.1 in Q1 2009 to

MNOK 4.1 in Q1 2010. Total gross margin is increasing

from 14.6% to 15.2%, while the cost base is up MNOK

3.1, partly caused by 41 additional employees from

the acquired units.

The Baltics

Revenue in the Baltics in Q1 was MNOK 81.0, which is

up 57.2% in constant currency. The main reason is EU

funded program for Ministry of Education, in total a

revenue of MNOK 13.8. Due to low product margins the

gross contribution is still MNOK 2.4 below the Q1

2009 level. Due to orders to the Municipality the

order backlog going into Q2 is satisfying in spite of

a generally difficult market.

EBITDA in Q1 is MNOK 0.8 compared with MNOK 0.3 the

previous year. The substantial cost reductions made

during 2009 have made it possible to cover up the

drop in gross margin and show an EBITDA margin of

1.0% in a challenging market environment.

Outlook

According to IDC, the total Nordic IT infrastructure

market targeted by Atea declined by 8.5% in 2009. The

IDC forecast for 2010 is a total market growth of

1.7%. Important technology trends, such as Unified

Communication, Mobile Infrastructure Solutions,

Virtualisation, Software Asset Management, Desktop

Lifetime Management, Windows 7 and Green IT, areas in

which Atea has established a strong presence through

organic initiatives and acquisitions during 2009 and

beginning of 2010, will help fuel IT investments

going forward.

Atea is expecting to continue gaining market shares

during 2010. The cost base has been trimmed during

2009 and implies that the run rate going into 2010 is

lower than the run rate going into 2009.

It is expected that the positive organic development

in 2010 will be supplemented by growth through

acquisitions, as Atea has the financial strength and

a clear intent to continue playing an important role

in the ongoing market consolidation.

The target goal is to achieve revenues of NOK 20

billion and EBITDA of NOK 1 billion in 2011, based on

country targets for revenue and profit in local

currencies.

Equity and cash flow

Shareholders' equity as of March 31, 2010 was MNOK

2,895.7 and minority interests were MNOK 3.7

corresponding to an equity ratio of 44.5%. This is up

from 40.0% compared to March 31, 2009.

The Group generated an operational cash flow of MNOK

27.1 during Q1, 2010. This is MNOK 86.2 below

corresponding period last year and is explained by a

larger amount of prepayments from customers at the

end of 2009 which led to a record strong cash flow in

Q4, 2009. The operational cash flow has also been

affected by a build up in inventory expecting

increased revenue related to the "Free Choice" in

Denmark in Q2, 2010. The working capital ratio as of

31 March, 2010 was 1.7% which is down from 2.7% as of

31 March, 2009.

During Q1, 2010 ordinary investments were MNOK 16.6

and payments regarding acquisitions were MNOK 93.0.

The acquisition payments are related to Calamus in

Denmark, PALnet in Finland and the four Office

print/copy companies in Sweden. A total interest

bearing debt of MNOK 74.4 was acquired through these

companies in addition to the cash payments (MNOK

93.0).

Cash flow from equity transactions was MNOK 32.2 in

Q1, 2010 and is related to sale of own shares for the

employee option program.

Net interest bearing position as of 31 March, 2010

compared to 31 December, 2009 increased by MNOK 125.3

from MNOK 214.1 to MNOK 339.4. Cash reserves

including unutilised credit facilities as of 31

March, 2010 were MNOK 1,186.4.

Note:

· The interim financial statements have been

prepared in accordance with IFRS standard for interim

financial reporting (IAS 34). The statements are

consistent with accounting principles used in the

financial statements for 2009, plus IFRS 8, IAS 23

(Revised), IFRS 2 (Amendment), IAS 1 (Revised).

Enclosures on [http://www.newsweb.no]

Please go to [http://www.atea.com/reports] for the

quarterly report and presentation.

Video of the press conference is available at

[http://www.atea.com/webcast]

For further information, please contact:

Claus Hougesen, CEO Atea ASA, Mobile +45 3078 1200

Rune Falstad, CFO Atea ASA, Mobile +47 906 14 482

About Atea

Atea is the leading Nordic and Baltic supplier of IT

infrastructure with approximately 4600 employees.

Atea is present in 72 cities in Norway, Sweden,

Denmark, Finland, Lithuania, Latvia and Estonia. Atea

delivers IT products from leading vendors and assist

its customers with specialist competencies within IT

infrastructure services. Atea has an annual revenue

of approximately NOK 15 billion and is listed on Oslo

Stock Exchange. [http://www.atea.com]