Atea — Earnings Release 2010

Oct 21, 2010

Atea Q3 2010 financial results

Highlights Q3 2010

· Revenue of MNOK 3,558.4, up 23.1% y-o-y, up

27.2% in constant currency

· EBITDA of MNOK 122.9, up 14.2%

· EBITDA margin of 3.5%, down from 3.7%

· EBIT of MNOK 70.6, up 9.7%

· Acquired Portal in Sweden, one of the

leading IT infrastructure companies in Sweden

· Acquired Belle Balance in Denmark, a leading

flexible benefit solutions company ("Free Choice")

Q3 2010 versus Q3 2009

Group

Group revenue in Q3 2010 is up 23.1% from MNOK

2,890.2 in Q3 2009 to MNOK 3,558.4 in Q3 2010. In

constant currency the growth y-o-y represents as much

as 27.2%. The growth in constant currency adjusted

for acquisitions represents 18.2%. The Nordic IT

market is expected by IDC to grow by 3.9% for the

full year 2010. This implies that Atea continues

gaining market shares. Hardware revenue increased by

36.5% in constant currency, services revenue was up

12.7% and software was up 12.0%. The main reason for

the growth in the hardware revenue is growth in the

PC business (clients).

EBITDA in Q3 2010 ended at MNOK 122.9, up 14.2% y-o-y

and represents a margin of 3.5%, down from 3.7% in Q3

2009. The improvement in EBITDA from MNOK 107.6 in Q3

2009 to MNOK 122.9 is due to increase in revenue.

Group EBIT ended at MNOK 70.6, which is up 9.7%

compared to corresponding period last year.

In the first nine months Atea generated total revenue

of MNOK 11,171.6 which is up 9.7% compared with

corresponding period last year. In constant currency

the growth is as much as 14.3% and adjusted for

acquisitions the growth represents 10.0% y-o-y.

EBITDA ended at MNOK 375.0, up from MNOK 315.8 last

year, representing an EBITDA margin of 3.4%, up from

3.1% in 2009.

Norway

Revenue in Norway in Q3 was MNOK 1,048.0, which is up

by 30.7% compared with Q3 2009. Product revenue was

up by strong 33.6%, while consulting and services

revenue was up by 18.7%. Especially PC products

(clients) towards public sector show a good

performance. Revenue growth in Q3, excluding the

impacts from the acquired businesses was 24.9%. IDC

predicts an annual 2010 growth y-o-y for Norway (Atea

Blue Box products and services) of 1.5% (2009: -

7.7%). Hence, Norway is still gaining market shares.

EBITDA for Q3 2010 ended at MNOK 38.4, up 75.1%

compared with Q3 2009. The EBITDA margin was 3.7%, up

from 2.7% in Q3 2009, reflecting satisfying gross

margins and cost control.

During Q3 Atea Norway signed a 2 years (with optional

1+1 year) frame agreement with The Norwegian Defence

Logistics Organisation/information and communication

services (FLO/IKT). Atea estimates the contract value

to MNOK 300 per year. In addition, Atea Norway signed

a 3 years (with optional 2 years) agreement with

Kongsberg Gruppen to deliver ICT equipment, logistics

and consultancy services at an estimated annual value

of MNOK 100. Order backlog going into Q4 is strong,

up 82% compared with 2009.

Denmark

Revenue in Q3 2010 ended at MNOK 1,135.4, up 19.9% in

constant currency compared with Q3 2009. Product

revenue was up 27.1%, while consulting and services

revenues were at the same level. Excluding impacts

from acquisitions, revenue in constant currency was

up 13.6%. IDC prediction for annual 2010 growth y-o-y

for Denmark is 4.5% (2009: -10.8%). Hence, Denmark is

gaining market shares. Especially PC products

(clients), network and mobile equipment show a strong

performance, while consulting is lacking larger

projects.

EBITDA ended at MNOK 41.4 compared with MNOK 60.6 in

Q3 2009, a decrease in constant currency of 24.8%.

Due to a less favourable mix, caused by the strong

volume performance within low-margin PC business and

flat services revenue, the overall gross margin has

decreased.

Mid August Atea Denmark entered into agreement to

acquire Belle Balance A/S, which will make Atea the

absolute leading business within the market for

flexible benefit solutions for employees ("Free

Choice") in Denmark. The acquired company is expected

to deliver revenue of MNOK 85.2 and an EBITDA of MNOK

10.7 for the full year 2010. The agreed transaction

value is MNOK 47.9 and enterprise value is estimated

to

MNOK 44.2.

Sweden

Sweden reached revenue of MNOK 1,016.9 in Q3, which

is up 37.4% in constant currency compared with Q3

2009. Product revenue was up 40.8% and consulting and

services revenues were up 26.8%. Revenue growth in

Q3, excluding impacts from acquired businesses, was

18.3% in constant currency, compared with IDC

predictions for annual 2010 growth for Sweden of 3.7%

y-o-y (2009: -8.7%). Hence, Sweden is constantly

gaining market shares in the biggest Nordic IT

market. The growth, excluding impacts form

acquisitions, for product revenue was 20.7% and for

consulting and services revenues were 10.3% (in

constant currency).

EBITDA for Q3 ended at MNOK 29.2, up 22.7% in

constant currency and implying an EBITDA margin of

2.9% (Q3 2009: 3.2%). Both product and services

margins are below the level of previous year. The

combined effects from change in mix together with an

increase in low-margin products (clients) are causing

the overall margin to fall.

Earlier this year 4 Office print/copy companies and

Impact Europe AB were acquired, having major impacts

when comparing actual figures with figures of

previous years.

Beginning August Atea Sweden entered into agreement

to acquire Portal AB with 110 employees and revenue

of MNOK 502.5 and EBITDA of MNOK 12.8 in 2009. Portal

is recognized as one of the strongest and fastest

growing IT infrastructure companies in Sweden. The

acquired company is expected to deliver

revenue of MNOK 643.9 and EBITDA of MNOK 20.4 in

2010. The agreed transaction value is MNOK 102.5 and

enterprise value is estimated to MNOK 115.3.

In order to take out synergies, Atea expects

approximately MNOK 10 in integration cost of all

acquired companies in Q4 2010.

Finland

Revenue in Finland in Q3 ended at MNOK 289.3, which

is up 21.8% in constant currency compared with Q3

2009. Product business is still performing well and

is up 23.3%, while consulting and services are up

8.8%. Revenue growth, excluding impacts from acquired

businesses (A Communications and PALnet), is 8.2% in

constant currency, to be compared with IDC

predictions for annual 2010 growth for Finland of

5.7% y-o-y (2009: -10.8%). Hence, Finland is still

gaining market shares.

EBITDA for Finland was up from MNOK 1.1 in Q3 2009 to

MNOK 5.9 in Q3 2010. Product margin is well above

previous year, partly caused by positive product mix

impacts from acquired companies and lack of larger

low-margin public projects. The pro forma cost base

is at the same level as Q3 2009.

Beginning July Atea Finland was chosen, as the only

provider, for a frame agreement with KL-

Kuntahankinnat Oy to deliver Microsoft software

licenses and related services with an estimated total

value of approximately MNOK 103 over 4 years.

The Baltics

Revenue in the Baltics in Q3 was MNOK 77.4, which is

up 55.2% in constant currency from Q3 2009 and is

primarily reflecting day-to-day EU funded business

with less content of low-margin projects.

EBITDA in Q3 was MNOK 2.4 compared with MNOK 0.9 the

previous year. The market in the Baltic region is

still difficult. Cost level in Q3 2010 is about the

same level as of Q3 2009.

Outlook

According to IDC the total Nordic IT infrastructure

market targeted by Atea, declined by 9.4% in 2009.

The IDC forecast for 2010 is a total market growth of

3.9%. In the first nine months of 2010 Atea growth

was 14.3% in constant currency. Atea is expecting to

continue gaining market shares during 2010. Important

technology trends, such as Unified Communication,

Mobile Infrastructure Solutions, Virtualisation,

Software Asset Management, Device Lifecycle

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 continue to fuel IT

investments going forward.

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.

Atea dividend policy - increased payout ratio

Due to consistent strong performance the Board of

Directors in Atea ASA has in Board meeting 20 October

2010 decided to change the dividend policy by

increasing the payout ratio from currently 10-40 per

cent of net profit to 40-60 per cent of net profit

adjusted for normalized tax.

It is the Board of Directors' objective to offer

competitive returns to its shareholders supported by

a high dividend pay out ratio.

Atea will continue to combine organic growth with

growth through acquisitions, as Atea has the

financial strength and a clear intent to continue

playing an important role in the ongoing market

consolidation.

Equity and cash flow

Shareholders' equity as of September 30, 2010 was

MNOK 2,936.1 and minority interests were MNOK 4.2

corresponding to an equity ratio of 41.4%, down from

44.2% compared to September 30, 2009.

The Group generated an operational cash flow of MNOK -

66.8 during Q3 2010. This is MNOK 71.3 below Q3 2009

and is mainly caused by a build up in inventory

expecting increased revenue going into Q4.

During Q3 2010 capital expenditures were MNOK 35.8

and payments regarding acquisitions were MNOK 99.1.

The acquisition payments are related to Portal in

Sweden, Belle Balance in Denmark and Spintop (earn

out) in Sweden. A total interest bearing debt of MNOK

10.9 was included in the balance sheet from

these companies in addition to the cash payments

(MNOK 99.1).

Cash flow from equity transactions was MNOK -6.6 in

Q3 2010 and is related to buy back of own shares.

The working capital ratio as of September 30, 2010,

was 3.7% which is down from 4.3% as of September 30,

2009. Net interest bearing position as of September

30, 2010, compared to June 30, 2010, increased by

MNOK 222.6 from MNOK 508.4 to MNOK 731.0. Cash

reserves including unutilised credit facilities as of

September 30, 2010, were MNOK 893.5.

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 4800 employees.

Atea is present in 73 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]