Merger closing to be carried out - outlook for third quarter earnings
(Oslo, 30 September 2010) EDB Business Partner ASA and ErgoGroup AS will carry
out the closing of the merger between the companies with accounting effect from
30 September 2010. In addition, EDB is writing down the balance sheet value of
software, and announces weaker earnings for the third quarter of 2010.
Merger
The closing of the merger between EDB and ErgoGroup AS will be carried out with
accounting effect from 30 September 2010. The merger will be completed on 14
October 2010 once the remaining formalities have been completed.
A prospectus in respect of the shares to be issued as consideration to Norway
Post ('Posten') will be issued in mid-October.
Public Sector solutions area
As communicated earlier, EDB has experienced cost overruns and delays with its
project to develop new solutions for the municipality sector. Development and
implementation costs incurred in Q3 and subsequent periods will not be treated
as satisfying the criteria for capitalisation, and will therefore have a
negative impact on EBITA, but will not cause any change to cash flow.
The Board of Directors of EDB has resolved to write down the balance sheet value
of software developed in-house by NOK 176 million in the third quarter of 2010.
The remaining balance sheet value is NOK 9 million.
The change in accounting treatment is expected to give rise to an EBITA loss in
the order of NOK 40 million for the third quarter of 2010 in the Public Sector
solutions area. The development project is expected to be completed over the
course of the first six months of 2011.
Third quarter results
In connection with the presentations of the second quarter interim reports, EDB
and ErgoGroup announced separate programs of cost-saving measures.
EDB has previously indicated that non-recurring costs totalling NOK 120 million
would be recognised in the third quarter 2010 accounts in respect of its costs
program, which is due to be completed in the fourth quarter of 2010 and was
expected to have an annual effect on costs of NOK 200 million from 1. quarter
2011. A review has shown that these costs are now expected to be in the order of
NOK 80 million. The annual effect is now expected to be in the order of NOK 180
million from 1. quarter 2011 onwards.
EDB continues to experience weaker demand in the Industry segment. Taken
together with the impact on earnings of the Public Sector solutions area, this
means that EDB anticipates EBITA before restructuring costs in the order of NOK
65 million for the third quarter of 2010. ErgoGroup anticipates EBITA in the
order of NOK 85 million for the same period.
EDB ErgoGroup will present consolidated figures for the combined company at the
presentation of the third quarter interim accounts.
In connection with the merger, EDB and ErgoGroup have carried out impairment
testing as part of the process of establishing the opening balance sheet. This
has not identified any need for additional write-downs.
EDB ErgoGroup will hold a presentation of the third quarter interim report at
08:00 on 19 October 2010 at Vika Atrium in Oslo. The company will also provide a
webcast of the presentation.
Any enquiries may be addressed to:
John-Arne Haugerud, Acting CEO. Tel: + 47 22 77 21 01
Vidar Nysæther, Acting  CFO. Tel:  + 47 97 08 81 61
Geir Remman, EVP, Corporate Communications. Tel: + 47 970 55 017
About EDB
EDB Business Partner is a leading information technology (IT) services provider
in the Nordic region. We help customers unlock substantial value from the entire
IT services value chain, spanning solutions, consulting and outsourcing. The
company has some 6,000 employees and reported annual turnover of around NOK 7.5
billion in 2009. EDB aims to be a close and attentive partner that combines its
local expertise and deep industry knowledge with substantial international
delivery capacity. EDB Business Partner ASA is listed on the Oslo Stock Exchange
with ticker code EDBASA.
Seewww.edb.com for further information.
This information is subject of the disclosure requirements acc. to §5-12 vphl
(Norwegian Securities Trading Act)
[HUG#1447831]
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Source: EDB Business Partner ASA via Thomson Reuters ONE
