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Itera Interim / Quarterly Report 2010
3639_rns_2010-10-19_45e89a5a-bbbf-49c5-9dfb-7d15651fe77d.pdf
Interim / Quarterly Report
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Interim Report
Third Quarter 2010
CEO Arne Mjøs
CFO Frank Martinsen
Oslo, 19 October 2010
itera
Third Quarter 2010
→ Highlights in the third quarter
- Seasonal variation in Q3 2010
- Revenues down 5% and EBIT down 55% compared to Q3 2009
- Divested business in Q3 2010
-
2010 will be a transformation year
-
Towards a focused company
- Positioning for larger long-term engagements
-
Transformation continues according to plan
-
Good long-term perspective
- Good demand in Norway and Sweden
- Improvements in Denmark
Revenues
NOK million
itera
Third Quarter 2010
Business Review
Third Quarter 2010
itera
Third Quarter 2010
→ Market environment
- Enterprises focus on new growth opportunities and increase spending plans on new technologies and solutions. The hot sales of devices as iPads trigger everyone's interests.
- Less intense competition but a cautious mind-set continues as the norm among most buyers.
- Fewer large IT outsourcing deals but selective multi-sourcing is increasing. Cloud services bring both uncertainty and possibilities.
- Increasing demand for nearshore services to increase capacity driven by reduced time-to-market and revenue growth.
-
Strong demand for business intelligence, software-as-a-service (SaaS), web 2.0 and social media.
-
We see a strong demand for our services offerings
itera
Third Quarter 2010
→ Towards a focused Nordic company
itera
- Positioning the ITERA brand in all countries we operate
- Leverage seamless nearshoring for new opportunities of efficiency and growth
- Take a leading position in superior user experience at any device
- Create project deliverables and full life-cycle management with large customers
itera
Third Quarter 2010
→ Strategic change agenda
| From | To |
|---|---|
| Many accounts and short pipeline visibility | Large accounts and long term book-to-bill |
| Technology features | Business value |
| Individuals | Project teams |
| Many local delivery models | Unified delivery model |
| Fragmented | Focused and aligned |
itera
Third Quarter 2010
→ New group structure
itera
- The transformation from nine units in four countries into a aligned focused Nordic company is very successful
itera
Third Quarter 2010
→ From CV’s to project delivery
- Full management team in place from the 1st October in Itera Consulting.
- A blended mix of top performers from our industry
- Creating a strong consulting unit and life-cycle delivery chain
- Strong sales pipeline based on new approach
- Increasing long term relationships with existing customers
Today's business mix
| Projects | Consultants (CV’s) |
| --- | --- |
| 20 % | 80 % |
Tomorrow's business mix
| Project deliverables | CV’s |
| --- | --- |
| 80 % | 20 % |
itera
Third Quarter 2010
itera
Third Quarter 2010
Page 9
→ Towards full life-cycle delivery
→ Taking leadership in User Experience (UX)
- Acquisition of Visual Funk in Q3 to increase capacity in digital communication and mobile solutions
- Hotspot in social media communication services
- Financial self-service solutions on iPhone and iPad in banking
- Itera is defining new ways to integrate business, communication and technology
itera
Third Quarter 2010
→ Lotto is a typical case for integrated service offerings
- Business
- Strategy and concept development
- Communication
- Design and user experience
- Digital campaigns
- Technology
- Development
- Maintenance
- Hosting
- Itera Gazette is providing life-cycle delivery to Lotto through seamless integrated service offerings in Itera
itera
Third Quarter 2010
→ Seamless Nearshoring is integrated into all service offerings
- Key drivers from customers
- Drive innovation: Value based sourcing
- Price pressure: More value for less
-
Resource constraints: Access to global resource pool
-
Ukraine as the most attractive destination
- Cultural similarities with the Nordics
- Low IT salaries
- High tech education
- Available pool of IT resources
- Only 2.5 hours flight away.
| 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
Third Quarter 2010
→ A growing workforce
- 365 employees after divested business
- Nearshoring ratio at 11%
- Itera will continue to grow its workforce onshore and nearshore.
itera
Third Quarter 2010
→ A growing number of agreements and increasing customer wallet share
DnB NOR
Nordea
SpareBank 1
STATENS PENSJONSKASSE
Oslo kommune
BOTKYRKA KOMMUN
INNOVASJON NORGE
FOA
iF...
AKADEMIBOKHANDELN
ENIR
SE
ENERGIMIDT
SAXO BANK
Mekonomen
itera
Third Quarter 2010
Page 14
Financial Review
Third Quarter 2010
itera
Third Quarter 2010
→ Key figures
| Q3 2010 | Q3 2009 | Change % | YTD 2010 | YTD 2009 | Change % | FY 2009 | |
|---|---|---|---|---|---|---|---|
| Operating revenue | 84.0 | 88.0 | -5 | 284.3 | 311.6 | -9 | 411.5 |
| EBITDA | 6.4 | 10.1 | -37 | 23.0 | 31.1 | -26 | 39.6 |
| EBITDA margin | 7.6 % | 11.5 % | -34 | 8.1 % | 10.0 % | -19 | 9.6 % |
| Operating profit (EBIT) | 3.0 | 6.7 | -55 | 13.2 | 21.0 | -37 | 26.5 |
| EBIT margin | 3.6 % | 7.6 % | -53 | 4.6 % | 6.7 % | -31 | 6.4 % |
| Profit before taxes | 3.2 | 6.7 | -53 | 14.3 | 21.4 | -33 | 29.3 |
| Profit for the period | 5.2 | 4.9 | 7 | 13.2 | 15.5 | -14 | 20.6 |
| Earnings per share (EPS) | 0.06 | 0.06 | 8 | 0.16 | 0.19 | -13 | 0.25 |
| Net cash flow from operations | -2.3 | 1.3 | 0.4 | 21.3 | 51.5 | ||
| Cash and cash equivalents | 45 | 53 | 45 | 53 | 72 | ||
| Equity ratio | 53 % | 51 % | 53 % | 51 % | 49 % | ||
| Number of employees at end of period | 365 | 383 | -5 | 365 | 383 | -5 | 370 |
| Number of employees in average | 370 | 384 | -4 | 372 | 387 | -4 | 381 |
itera
Third Quarter 2010
→ Income statement
| NOK Million | Q3 2010 | Q3 2009 | Change % | YTD 2010 | YTD 2009 | Change % | FY 2009 |
|---|---|---|---|---|---|---|---|
| Operating revenue | 84.0 | 88.0 | -5 | 284.3 | 311.6 | -9 | 411.5 |
| Cost of sales | 13.0 | 13.4 | -3 | 52.1 | 51.8 | 1 | 67.0 |
| Personnel expenses | 55.9 | 58.2 | -4 | 184.4 | 203.8 | -10 | 268.3 |
| Depreciation | 3.4 | 3.4 | -3 | 9.8 | 10.2 | -4 | 13.1 |
| Other operating expenses | 8.8 | 6.2 | 41 | 24.8 | 24.7 | 0 | 36.5 |
| Total operating expenses | 81.0 | 81.3 | 0 | 271.1 | 290.6 | -7 | 385.0 |
| Operating profit (EBIT) | 3.0 | 6.7 | -55 | 13.2 | 21.0 | -37 | 26.5 |
| Net financial income | 0.2 | 0.1 | 165 | 1.1 | 0.5 | 139 | 2.8 |
| Profit before taxes | 3.2 | 6.7 | -53 | 14.3 | 21.4 | -33 | 29.3 |
| Income taxes | -2.1 | 1.9 | -211 | 1.1 | 6.0 | -82 | 8.7 |
| Net profit for the period | 5.2 | 4.9 | 7 | 13.2 | 15.5 | -14 | 20.6 |
itera
Third Quarter 2010
→ One-offs transformation effects
| NOK Million | Q3
2010 |
| --- | --- |
| Net effect divestment | 8.4 |
| Organizational changes | -4.0 |
| New brand platform | -3.0 |
| Others | -0.6 |
| One-offs effect | 0.8 |
- Profit from the divestment of Promis is balanced by one-offs expenses from the transformation program
itera
Third Quarter 2010
→ Cash flow statement
| NOK Million | Q3 2010 | Q3 2009 | YTD 2010 | YTD 2009 |
|---|---|---|---|---|
| Cash flow from operating activities | ||||
| Cash flow from operations (EBITDA) | 6.4 | 10.1 | 23.0 | 31.1 |
| Change in balance sheet items | -8.7 | -8.8 | -22.6 | -9.8 |
| Net cash flow from operating activities | -2.3 | 1.3 | 0.4 | 21.3 |
| Net cash flow from investment activities | -2.7 | -3.4 | -9.0 | -9.5 |
| Cash flow from financing activities | ||||
| Purchase of own shares | -0.3 | -2.3 | -0.7 | -2.4 |
| Exercise of stock option programs | 0.0 | 0.0 | 0.0 | 0.0 |
| External dividend paid | 0.0 | 0.0 | -16.5 | -16.7 |
| Net cash flow from financing activities | -0.3 | -2.3 | -17.2 | -19.2 |
| Net change in bank deposits and cash | -5.4 | -4.4 | -25.9 | -7.3 |
| Bank deposits at the end of the period | 45.0 | 53.0 | 45.0 | 53.0 |
itera
Third Quarter 2010
→ Cash flow from operations
- Reduced cash flow from operations in 2010
- Rolling 12-month cash flow down from 2009 but flat to Q2 2010.
- Good control and visibility of accounts receivable
- No loss in 2010 YTD
itera
Third Quarter 2010
Page 20
→ Quarterly development
Operating revenue
NOK million
Employees
End of period
EBITDA and margin
NOK million
EBIT and margin
NOK million
itera
Third Quarter 2010
→ Shares and options
- 0.1 million own shares are purchased in Q3
- 2.9 million (3.4 %) number of own shares at end of period
- Average price of NOK 3.11 per share
- Market value of MNOK 9,2
- 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 | 82 464 033 |
| End of period number of own shares | 2 876 313 |
| End of period number of stock options | 0 |
- Itera holds 2.9 million own shares, corresponding to 3.4 %
itera
Third Quarter 2010
Outlook
Third Quarter 2010
itera
Third Quarter 2010
→ In summary, 2010 will be a transformation year towards long-term profitable growth
- Creating a focused company with a common brand footprint in the Nordics
- Transformation of business model from CV’s to projects and life-cycle delivery, including building a strong consulting discipline.
- Creating leadership in user experience through organic growth and acquisitions
- Implementation of nearshoring capability into all service offerings to ensure future competitiveness
- Consolidation of datacenters in Norway and Sweden into one Nordic operation
itera
Third Quarter 2010
→ Outlook
- 2010 will be a transition year to fulfil the transformation program towards a focused company
- Recruitment continues in all countries, some business effects to be seen in Q4 but mostly in 2011
- Strong position for great market opportunities in 2011
-
Itera does not give any forecasts
-
Itera will continue to prioritize quality, profit and growth, in that order
itera
Third Quarter 2010
itera
Third Quarter 2010
Page 26
3
itera
→ Top 20 shareholders
Name: ITERA ASA
Security type: AK
Date: 17.10.2010
| 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 | |
| 2,725,000 | 3.19 | EIKESTAD A/S C/O PARTNER REVISJON | NOR | |
| 2,400,000 | 2.81 | RBC DEXIA INVESTOR S S/A LUX-NON-RESIDENT | NOM | LUX |
| 2,379,436 | 2.79 | STOREBRAND LIVSFORSI P980, AKSJEFONDET | NOR | |
| 2,204,739 | 2.58 | ITERA CONSULTING GRO | NOR | |
| 2,200,000 | 2.58 | JØSYRA INVEST AS | 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 | |
| 1,373,332 | 1.61 | 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 | |
| 609,700 | 0.71 | ULLALAND MALVIN | NOR | |
| 608,100 | 0.71 | AS NORSKE SHELLS PEN P857AK | NOR | |
| 603,000 | 0.71 | GAMST INVEST AS | NOR |
47,894,715 56.11
itera
Third Quarter 2010
→ Notes
itera
Third Quarter 2010
Page 28
→ Notes
itera
Third Quarter 2010
Page 29
→ Notes
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Third Quarter 2010
Page 30
itera
Third Quarter 2010
Page 31
3/14/15
itera