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Itera Interim / Quarterly Report 2010
3639_rns_2010-07-09_52f02c36-e411-495a-b211-9c8c1ddb74b6.pdf
Interim / Quarterly Report
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Interim Report
Second Quarter 2010
CEO Arne Mjøs
CFO Frank Martinsen
Oslo, 9 July 2010
itera
Second Quarter 2010
→ Highlights in the second quarter
- Flat development from Q1 2010
- Revenues down 10% to MNOK 100 compared to Q2 2009 but flat to Q1 2010
-
EBIT down 23% but flat to Q1 2010
-
Towards a focused company
- Transformation process according to plan
-
Positioning for larger full-life cycle customer relationships
-
Market improvement
- Good demand in Norway and Sweden
- Still challenging market in Denmark but the dark clouds are lifting
Revenues
NOK million
EBIT
NOK million
itera
Second Quarter 2010
Business Review
Second Quarter 2010
itera
Second Quarter 2010
→ Market environment
- The IT market bottomed out in 2009 in Norway and Sweden but still challenging in Denmark.
- Nordic enterprises have increased IT budgets significantly.
- Pent-up demand for new technologies and next generation solutions is releasing as enterprises focus on new growth opportunities and increase spending plans.
- Less intense competition but a cautious mind-set continues as the norm among most buyers.
- Strong demand for business intelligence, software-as-a-service (SaaS) and next generation Internet (web 2.0 and social media).
- Increasing demand for nearshore services to increase capacity driven by reduced time-to-market and revenue growth.
- We see a strong demand for our next generation expertise
itera
Second Quarter 2010
Towards the focused One Billion Company
- Focus on full-lifecycle relationships with large customers
- Take a leading position in superior user experience at any device
- Leverage seamless nearshoring for new opportunities of efficiency and growth
-
Positioning the ITERA brand in all countries we operate, leveraging The Little Big Company
-
The transformation continues according to plan with business effects to be seen from Q4 2010
Leading Nordic next generation provider in selected services segments
itera
Second Quarter 2010
→ 1. Towards full lifecycle project deliverables
- Itera Consulting is transforming into large full lifecycle project deliverables
- Transformation program is running with business effects to be seen from Q4 2010
- Key people recruitments in business consulting, sales, management and service delivery in place
- Objectware is organized as a core development division
- Strong customer wins and framework agreements
- Nearshoring capability as part of service offerings to increase cost effectiveness
Tomorrow's business mix
| Project deliverables | CV's |
|---|---|
| 80 % | 20 % |
Today's business mix
| Projects | Consultants (CV's) |
|---|---|
| 20 % | 80 % |
itera
Second Quarter 2010
→ Case: KLP strategic partnership
- Large existing customer based on framework agreement
- 3+ years, 8-10 FTEs, growing volume
- Broad services mix, such as IT consulting, project management, system development and maintenance
-
Strategic services, i.e. digital innovation workshops
-
Growing customer wallet share
-
In Q2, Itera Consulting won a tender of developing KLP’s internal corporate portal for information sharing, collaboration, cultural development and knowledge transfer
-
KLP is a typical sustainable growing customer based on strong strategic relationships and long term framework agreements
itera
Second Quarter 2010
→ Craftsman in Residence at Itera
- An international industry movement
- Software development as a Craftsmanship
- The goal is to establish “Software Craftsman” as a hallmark
- Itera Consulting is defining the agenda in Norway
- Access to world’s most top competent people to work hands-on with our customers and consultants.
Skageri. Greg Young og adm. dir. I Itera Consulting Anders Lier (I.N). Foto: Magnus Söder.
Setter mestermerke på programvare
itera
Second Quarter 2010
→ 2. Take leadership in User Experience (UX)
- UX Innovation Lab created between Itera Gazette and Itera Consulting
- Return on Design & Return on Investment
- Business + communication + technology = true
- Strong demand but fragmented vendor space
- High attractiveness amongst key people, of which several in process with Itera.
itera
Second Quarter 2010
→ 3. Leverage Seamless Nearshoring
- Seamless Nearshoring is integrated into all service offerings
- Drive innovation: Value based sourcing
- Price pressure: More value for less
- Resource constraints: Access to global resource pool
-
Process maturity: Build world-class distributed agile delivery model
-
Ukraine is recognized as the most attractive Nearshore destination
- Low IT salaries
- Strong R&D heritage from the Sovjet past
- High tech education
- Innovation
- Available pool of IT resources.
| Country | M/E environment | Innovation | Innovative business models | IP Security | SD Costs | Availability of IT resources | Average score |
|---|---|---|---|---|---|---|---|
| Ukraine | 3 | 5 | 5 | 3 | 5 | 5 | 4,3 |
| Belarus | 3 | 3 | 3 | 3 | 3 | 4 | 3,1 |
| Russia | 4 | 4 | 3 | 3 | 3 | 5 | 3,6 |
| Poland | 5 | 4 | 4 | 4 | 4 | 3 | 4 |
| Romania | 4 | 4 | 4 | 4 | 3 | 4 | 3,8 |
| Hungary | 4 | 3 | 3 | 5 | 4 | 3 | 3,6 |
Source: European IT Outsourcing Intelligence Report 2010, IT Sourcing Europe Ltd
itera
Second Quarter 2010
→ Case: FINN.no with Nearshoring from Itera
- FINN.no is a recognized as a leading Lean SW development environment
- Itera Consulting selected amongst 13 vendors
- SCRUM-based approach
- Maintenance, enhancement and development of selected tasks of Finn.no portal based on SCRUM with seamless nearshoring
- Starting up with a team of 5 FTE’s from Ukraine
itera
Second Quarter 2010
→ 4. The new Itera structure
itera
- The new Itera brand across group companies was launched in June.
itera
Second Quarter 2010
Page 12
→ Devestment of Promis AS
- Strategic discussion about Promis’s role in the new Itera structure
- Promis is working mostly as independent advisor on behalf of the customer
- Potential conflict of interests with other group companies at the vendor side
-
Resignation by CEO and other key people
-
Itera to strengthen its strong project management capability as part of Itera Consulting instead
- Working as advisor and vendor is normal, i.e. Accenture, where conflict of interests are addressed according to industry best practices
-
In addition, focus on agile project management, new collaboration patterns and global delivery model
-
Promis sold to employees at a price of MNOK 16 with effect from 1st July 2010
itera
Second Quarter 2010
→ A growing number of framework agreements and increasing customer wallet share
DnB NOR
Oslo kommune
- Itera is increasing the total customer value, creating longer sustainable relationships with key customers.
itera
Second Quarter 2010
Financial Review
Second Quarter 2010
itera
Second Quarter 2010
→ Key figures
| Q2 2010 | Q2 2009 | Change % | 1H 2010 | 1H 2009 | Change % | FY 2009 | |
|---|---|---|---|---|---|---|---|
| Operating revenue | MNOK | 100.1 | 111.5 | -10 | 200.3 | 223.5 | -10 |
| EBITDA | MNOK | 8.4 | 10.1 | -17 | 16.6 | 21.0 | -21 |
| EBITDA margin | 8.4 % | 9.0 % | -7 | 8.3 % | 9.4 % | -12 | |
| Operating profit (EBIT) | MNOK | 5.1 | 6.7 | -23 | 10.2 | 14.3 | -29 |
| EBIT margin | 5.1 % | 6.0 % | -14 | 5.1 % | 6.4 % | -20 | |
| Profit before taxes | MNOK | 5.6 | 6.9 | -18 | 11.1 | 14.7 | -24 |
| Profit for the period | MNOK | 4.0 | 4.9 | -18 | 8.0 | 10.6 | -24 |
| Earnings per share (EPS) | NOK | 0.05 | 0.06 | -17 | 0.10 | 0.13 | -23 |
| Net cash flow from operations | MNOK | 5.4 | 17.3 | 2.7 | 20.0 | ||
| Cash and cash equivalents | MNOK | 51 | 59 | 51 | 59 | ||
| Equity ratio | 49 % | 47 % | 49 % | 47 % | |||
| Number of employees at end of period | 375 | 391 | -4 | 375 | 391 | -4 | |
| Number of employees in average | 374 | 391 | -4 | 373 | 391 | -5 |
itera
Second Quarter 2010
→ Income statement
| NOK Million | Q2 2010* | Q2 2009 | Change %* | 1H 2010* | 1H 2009 | Change %* | FY 2009 |
|---|---|---|---|---|---|---|---|
| Operating revenue | 100.1 | 111.5 | -10 | 200.3 | 223.5 | -10 | 411.5 |
| Cost of sales | 19.5 | 21.2 | -8 | 39.1 | 38.4 | 2 | 67.0 |
| Personnel expenses | 64.2 | 71.2 | -10 | 128.5 | 145.6 | -12 | 268.3 |
| Depreciation | 3.2 | 3.4 | -4 | 6.4 | 6.7 | -4 | 13.1 |
| Other operating expenses | 8.1 | 9.1 | -12 | 16.1 | 18.5 | -13 | 36.5 |
| Total operating expenses | 95.0 | 104.9* | -9 | 190.1 | 209.2* | -9 | 385.0 |
| Operating profit (EBIT) | 5.1 | 6.7* | -23 | 10.2 | 14.3* | -29 | 26.5 |
| Net financial income | 0.5 | 0.2 | 150 | 0.9 | 0.4 | 136 | 2.8 |
| Profit before taxes | 5.6 | 6.9* | -18 | 11.1 | 14.7* | -24 | 29.3 |
| Income taxes | 1.6 | 1.9 | -18 | 3.1 | 4.1 | -24 | 8.7 |
| Net profit for the period | 4.0 | 4.9* | -18 | 8.0 | 10.6* | -24 | 20.6 |
itera
Second Quarter 2010
→ Cash flow statement
| NOK Million | Q2 2010 | Q2 2009 | 1H 2010 | 1H 2009 |
|---|---|---|---|---|
| Cash flow from operating activities | ||||
| Cash flow from operations (EBITDA) | 8.4 | 10.1 | 16.6 | 21.0 |
| Change in balance sheet items | -2.9 | 7.3 | -13.9 | -1.0 |
| Net cash flow from operating activities | 5.4 | 17.3 | 2.7 | 20.0 |
| Net cash flow from investment activities | -3.5 | -3.2 | -6.3 | -6.4 |
| Cash flow from financing activities | ||||
| Purchase of own shares | 0.0 | 0.0 | -0.4 | -0.1 |
| Exercise of stock option programs | 0.0 | 0.0 | 0.0 | 0.0 |
| External dividend paid | -16.5 | -16.7 | -16.5 | -16.7 |
| Net cash flow from financing activities | -16.5 | -16.7 | -16.9 | -16.9 |
| Net change in bank deposits and cash | -14.6 | -2.6 | -20.5 | -3.3 |
| Bank deposits at the end of the period | 50.6 | 58.5 | 50.6 | 58.5 |
itera
Second Quarter 2010
→ Cash flow from operations
- Reduced cash flow from operations in 1H 2010
- MNOK 3, down from MNOK 20 in 1H 2009
- Lower operating revenues
- Work in progress and accounts receivable up by MNOK 4
- Public duties payable down by MNOK 8
- Good control and visibility of accounts receivable
- No loss in 1H 2010
itera
Second Quarter 2010
→ Quarterly development
Operating revenue
NOK million
Employees
End of period
EBITDA and margin
NOK million
EBIT and margin
NOK million
itera
Second Quarter 2010
→ Shares, options and dividend
- Dividend of NOK 0.20 per share paid in Q2 2010.
- 2.8 million (3.3 %) number of own shares at end of period
- Average price of NOK 3.12 per share
- The stock option program are not in the money
| End of period number of shares | 85 340 346 |
|---|---|
| End of period number of shares diluted | 82 560 462 |
| End of period number of own shares | 2 779 884 |
| End of period number of stock options. | 0 |
- A dividend payment of NOK 0.20 per share in Q2 2010.
itera
Second Quarter 2010
Outlook
Second Quarter 2010
itera
Second Quarter 2010
→ Outlook 2010
- A normalized macroeconomic environment in 2010 should support a return to modest growth in IT spending
- Recruitment will continue in Norway, Sweden and Ukraine, but awaiting a stabilized market situation in Denmark
- Transformation towards a focused company assumes to show business effects from Q4 2010
- Devestment of Promis will have effect from 1st July, reporting a profit of MNOK 11 in Q3 2010
-
Itera does not give any forecasts
-
Itera will continue to prioritize quality, profit and growth, in that order
itera
Second Quarter 2010
Page 23
itera
Second Quarter 2010
Page 24
3
itera
→ Top 20 shareholders
Name: ITERA CONSULTING GROUP ASA
Security type: AK
Date: 08.07.2010
| Holding → | Percentage ‡ | Name ‡ | Account type ‡ | Citizenship ‡ |
|---|---|---|---|---|
| 15,718,298 | 18.42 | ARNE MJØS INVEST AS | NOR | |
| 3,020,000 | 3.54 | PEDERSEN OLAV WERNER | NOR | |
| 3,003,000 | 3.52 | DELPHI NORGE JPMORGAN EUROPE LTD, | NOR | |
| 2,800,057 | 3.28 | DNB NOR SMB VPF | NOR | |
| 2,755,000 | 3.23 | EIKESTAD A/S C/O PARTNER REVISJON | NOR | |
| 2,400,000 | 2.81 | RBC DEXIA INVESTOR S S/A LUX-NON-RESIDENT | NOM | LUX |
| 2,256,100 | 2.64 | STOREBRAND LIVSFORSI P980, AKSJEFONDET | NOR | |
| 2,200,000 | 2.58 | JØSYRA INVEST AS | NOR | |
| 2,084,996 | 2.44 | ITERA CONSULTING GRO | NOR | |
| 2,031,588 | 2.38 | MARXPIST INVEST AS | NOR | |
| 1,632,000 | 1.91 | BRØDRENE JOHANSSEN H | NOR | |
| 1,420,000 | 1.66 | BOINVESTERING AS | NOR | |
| 1,301,663 | 1.53 | STOREBRAND VEKST JPMORGAN EUROPE LTD, | NOR | |
| 1,017,700 | 1.19 | STOREBRAND NORGE I JPMORGAN EUROPE LTD, | NOR | |
| 756,177 | 0.89 | AANESTAD PANAGRI AS | NOR | |
| 697,700 | 0.82 | STOREBRAND NORGE H JPMORGAN EUROPE LTD, | NOR | |
| 694,888 | 0.81 | OBJECTWARE AS | NOR | |
| 608,100 | 0.71 | AS NORSKE SHELLS PEN P857AK | NOR | |
| 600,000 | 0.70 | ULLALAND MALVIN | NOR | |
| 591,164 | 0.69 | DANSKE BANK A/S 3887 OPERATIONS SEC. | NOM | DNK |
47,588,431 55.75
itera
Second Quarter 2010
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→ Notes
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Second Quarter 2010
Page 26
→ Notes
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Second Quarter 2010
Page 27
→ Notes
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Second Quarter 2010
Page 28
→ Notes
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Second Quarter 2010
Page 29
→ Notes
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Second Quarter 2010
Page 30
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Second Quarter 2010
Page 31
2010/2011
itera