EDB BUSINESS PARTNER ASA
Third quarter 2005
EDB Business Partner > slide 2
Q3 HIGHLIGHTS – EDB BUSINESS PARTNER
Strong growth and profitability– Revenue growing 18 percent year-on-year
– EBITA margin at 10.6%
Strong operational cash-flow
Strategic B2B e-invoicing agreement – transaction based
i-flex agreement signed – joint go-to-market plan
Launch of Public Sector initiatives
Gaining share in Midmarket IT Operations
Divestment of Telecom Solutions
EDB Business Partner > slide 3
Q3 HIGHLIGHTS SWEDEN
Revenue NOK 156 million (68 percent growth year-on-year)
Major wins– OP Bank
– Bona Kemi
– Draka Kabel
– Bofors
Regained profitability in Solutions
Profitability of IT Operations not satisfactory – cross border consolidation initiated
EDB Business Partner > slide 4
KEY FIGURES Q3 2005 – GROUP
NOK million Q3'05 Q3'04* Y/Y
Operating revenue 1 164 990 18 %Operating costs 1 041 868 20 %Operating profit before amortisation (EBITA) 123 122 1 %
EBITA % 10.6 % 12.3 %
EBIT 99 122
Profit before tax 92 115
Cash flow from operations 196 189 Operational investments (CAPEX) 105 49
Earnings per share (NOK) 0.70 0.90
No. of employees 2 707 2 546 *Adjusted for deconsolidation of Telecom business area
EBITA % adjusted for IFRS deferred revenue rec. 10.5 % 10.2 %
EDB Business Partner > slide 5
OPERATING REVENUE – GROUP
0
200
400
600
800
1 000
1 200
1 400
Q1 Q2 Q3 Q4
2003 2004 2005
EDB Business Partner > slide 6
REVENUE SPLIT BY SECTOR AND BUSINESS AREA
78 %
22 %
IT Operations Solutions
52 %
22 %
15 %
11 %
Bank & Finance (56%) Distribution (22%)Telecom (26%) Public (2%)
(2004-share)
EDB Business Partner > slide 7
EBITA-MARGIN – GROUP
-10 %
-5 %
0 %
5 %
10 %
15 %
Q1 Q2 Q3 Q4
2003 2004 2005
EDB Business Partner > slide 8
CASH FLOW FROM OPERATIONS – GROUP
-200
-100
0
100
200
300
400
Q1 Q2 Q3 Q4
2003 2004 2005
EDB Business Partner > slide 9
NET INTEREST BEARING LIABILITIES – GROUP
0
100
200
300
400
500
600
700
800
900
1000
Q1 Q2 Q3 Q4
2003 2004 2005
EDB Business Partner > slide 10
ROIC: RETURN ON INVESTED CAPITAL
0 %
5 %
10 %
15 %
20 %
25 %
30 %
Q1 Q2 Q3 Q4
2003 2004 2005
EDB Business Partner > slide 11
ORDER BACKLOG – NOK 12 BILLION
NOK million Order backlog Order backlog distributed30.09.2005 2005* 2006 2007 2008 Later
IT Operations 11 015 829 2 753 2 460 2 005 2 967
Solutions 1 640 263 597 422 190 168
Total order backlog 12 655 1 092 3 350 2 882 2 195 3 135
% of total 9 % 26 % 23 % 17 % 25 %
* Includes Q4
IT OPERATIONS
EDB Business Partner > slide 13
Q3 HIGHLIGHTS – IT OPERATIONS
Continuous profitable growth– Revenue up 14 percent year-on-year
– 9.4 percent EBITA-margin
B2B e-invoicing solution ready to be launched
Strong growth in Midmarket, new initiative launched
Continuous improvement program:– One Nordic mainframe operation
– Helpdesk consolidation
– Server Consolidation
EDB Business Partner > slide 14
KEY FIGURES – IT OPERATIONS
NOK million Q3'05 Q3'04* Y/Y
Operating revenue 920 805 14 %
Cost of goods sold 327 332 -2 %Salaries and related costs 265 223 19 %Ordinary depreciation 72 62 16 %Other operating costs 170 107 59 %Total operating costs 833 724 15 %
Operating profit before amortisation (EBITA) 86 81 6 %EBITA % 9.4 % 10.1 %
Operational investments (CAPEX) 97 49No. of employees 1 687 1 630* IFRS adapted
EDB Business Partner > slide 15
IT OPERATIONS – REVENUES
0
200
400
600
800
1 000
1 200
Q1 Q2 Q3 Q4
2003 2004 2005
EDB Business Partner > slide 16
IT OPERATIONS – EBITA-MARGIN
0 %
2 %
4 %
6 %
8 %
10 %
12 %
Q1 Q2 Q3 Q4
2003 2004 2005
SOLUTIONS
EDB Business Partner > slide 18
Q3 HIGHLIGHTS – SOLUTIONS
Strong profitable growth– Revenue growth 26 percent year-on-year
– Improved EBITA-margin – y-o-y comparison influenced by IFRS-accounting
Signing of i-flex agreement
Improved performance in Sweden
Positioned for growth in Public sector /
e-government
EDB Business Partner > slide 19
KEY FIGURES – SOLUTIONS
NOK million Q3'05 Q3'04 Y/Y
Operating revenue 265 210 26 %
Costs of goods sold 23 12 92 %Salaries and related costs 117 95 23 %Ordinary depreciation 2 2 0 %Other operating costs 72 47 53 %Total operating costs 214 156 37 %
Operating profit before amortisation (EBITA) 51 54 -6 %EBITA % 19.3 % 25.8 %
Operational investments (CAPEX) 1 3No. of employees 752 648* IFRS adapted
EBITA % adjusted for IFRS deferred revenue rec. 19.0 % 16.7 %
EDB Business Partner > slide 20
OPERATING REVENUES – SOLUTIONS
0
50
100
150
200
250
300
Q1 Q2 Q3 Q4
2003 2004 2005
EDB Business Partner > slide 21
EBITA-MARGIN – SOLUTIONS
-40%-10 %
-5 %
0 %
5 %
10 %
15 %
20 %
25 %
30 %
Q1 Q2 Q3 Q4
2003 2004 2005
FUTURE PROSPECTS
EDB Business Partner > slide 23
FUTURE PROSPECTS
Midmarket outsourcing growth
e-invoicing business-to-business solution – Agreement with DnB NOR
i-flex - Strategic Nordic and Global Agreement
EDB Business Partner > slide 24
MIDMARKET OUTSOURCING GROWTH
Total Outsourcing market Norway, BNOK 8.9 Midmarket outsourcing drivers
– Core business focus
– Cost cutting
– Infrastructure Complexity
Current delivery model – High degree of customisation
– Low margins
Future Delivery model– Standardization
– Streamlining
– Cost efficiency
Mid market*
41 %
Enter-prise
Market59 %
Market share – mid market*
Tele-comp.
7 %
37 %
Ergo + Ementor
21 %
35 %EDBOther
* Definition mid market: < 4000 employeesSource: IDC CAGR 9% 2005-2008
EDB Business Partner > slide 25
Breakthrough in B2B e-invoicing
Invoice issuerJoint system for electronic management of invoices between Norwegian companies and public sector entities:
– Links corporate issuers and recipients of invoices through a common contact point
– Manages the exchange of electronic invoice payments to and from issuers’ and recipients’internet banking accounts via the contact point
– Can be linked to company accounting systems and current B2C solutions
– Will be presented as a banking product and distributed via internet banks
INTERNET BANK
INTERNET BANK
Invoice exchange(EDB’s solution)
Invoice recipient
EDB Business Partner > slide 26
e-invoicing solution offers cost savings and better control
Invoice management to the next level of efficiency– Potential company cost reductions of 50 % (payment and
invoice management)
– Improved cash management control
– Status of invoice flow at any time
– All invoice issuers and recipients that the company has a relationship with
– Industry standard technology
– High level of security
EDB Business Partner > slide 27
DnB NOR and EDB Agreement
Long term relationship with DnB NOR
Transaction-based price model
Revenue generation from 1Q 2006
Solution developed by EDB – limited additional investments
Strong growth in Nordic B2B e-invoicing segment– Non exclusive – EDB solution available for Nordic banks
EDB Business Partner > slide 28
BANKING & FINANCE – STRATEGIC DEVELOPMENT
i-flex/EDB - Joint Business Plan– Exclusive rights for Nordic region– Packaged Solution with FLEXCUBE from i-flex
and solutions and components from EDB– UNIX platform– Best-selling solution world-wide last three years– Choice of i-flex supported by Benchmark
study by IDC – Financial Insights
Investments in resources and integration of EDB componentsMarket potential
– Tier 1/2/3 with joint i-flex / EDB Target Solution– Tier 1 with Universal Bank Solution (UBS) from i-flex
Distribution of EDB Global components in next phase
EDB Business Partner > slide 29
SUMMARY AND OUTLOOK
Continued strong financial performance
Maintaining 2005/2006 Nordic IT Services Market outlook
Strong 4Q & 2006 Backlog
Organic and acquisition growth in Solutions
New initiatives– Midmarket operations
– B2B e-invoicing with DnB NOR
– i-flex