Atea Q4 2011 financial results
Highlights Q4 2011
- Revenue of MNOK 6,519.2, up 9.4% y-o-y
- EBITDA of MNOK 374.9, up 24.8% y-o-y
- EBITDA margin of 5.8%, up from 5.0% y-o-y
- EBIT of MNOK 311.4, up 27.5% y-o-y
- Cash flow from operations of MNOK 1,051.5
- Net cash positive with MNOK 289.0 at end of 2011
Market update
IDC's preliminary figures for Atea's addressable market (the Blue Box) show a growth of 2.8% in the Nordics in 2011. The preliminary figures show a hardware growth of 1.9%, a software growth of 4.7% and a consulting and services growth of 2.7%.
The financial turmoil in Europe has also impacted the Nordic IT infrastructure market as market growth in the second half of 2011 was only slightly positive.
In comparison to the preliminary figures for market growth of 2.8% for the full year 2011, Atea delivered an actual growth in constant currency of 19.0% and an organic growth of 6.7% in the Nordics. This demonstrates that Atea continues to gain market shares.
Financial review Full Year 2011
Group
EBITDA for the full year ended at MNOK 871.1, up from MNOK 675.3 in 2010, representing a growth of 29.0%. EBITDA margin ended at 4.3%, which is up from 3.9% in 2010. EBIT ended at MNOK 651.3, up from MNOK 474.4, representing a growth of 37.3%.
Revenue ended at MNOK 20,227.8 versus MNOK 17,131.2 in 2010, corresponding to a growth of 18.1% and 18.8% in constant currency. Organic growth in constant currency was 6.6% in a market which according to IDC grew 2.8%. Taking into account the full year effect of the acquired companies during 2011, the proforma revenue was MNOK 20,498.3.
The Atea Group generated MNOK 1,054.8 in cash flow from operations in 2011, which is up from MNOK 586.5 in 2010. This increase is mainly due to improved earnings combined with improvements in working capital. The strong cash flow implies that the Group ended the year being net cash positive with MNOK 289.0. Cash payments of MNOK 178.5 relate to acquisitions and MNOK 199.2 relates to dividend payment in 2011.
The solid result in 2011 and the company's strong financial position give Atea the opportunity to increase dividend substantially. The Board of Directors will suggest to the General Assembly to pay NOK 5.00 per share in dividend for 2011, up from NOK 2.00 in 2010.
Financial review Q4 2011
Group
Group revenue in Q4 2011 is up 9.4% from MNOK 5,959.6 in Q4 2010 to MNOK 6,519.2 in Q4 2011. Hardware revenue increased by 7.5%, consulting and services revenue was up 10.6% and software revenue was up 13.9%. The organic growth represents 5.1% in constant currency, thus Atea continues gaining market shares.
EBITDA in Q4 2011 ended at MNOK 374.9, up 24.8% y-o- y, which represents a margin of 5.8%, up from 5.0% in Q4 2010. The improvement in EBITDA is mainly due to increase in revenue combined with tight cost control. Total operating cost is organically 1.3% lower in Q4 2011 compared to Q4 2010 in constant currency. Group EBIT ended at MNOK 311.4, which is up 27.5% compared to the corresponding period last year.
Earnings after taxes ended at MNOK 326.7 in the fourth quarter. This reflects MNOK 33.4 in further recognition of deferred tax assets related to tax loss carry forward. Tax loss carry forward was NOK 3.4 billion at the end of 2011.
Norway
Revenue in Q4 2011 was MNOK 2,044.0, which is up by 40.7% compared with Q4 2010. Product revenue was up 41.7%, while consulting and services revenue was up 35.4%. Organic revenue growth in Q4 was 15.7%. Norway had a strong December related to revenue from public sector.
EBITDA for Q4 2011 ended at MNOK 104.6, up 57.0% compared with Q4 2010. Product margins ended at 11.9% in Q4 2011, which is down by 0.4% compared with Q4 2010. Total operational expenses increased by 35.0% compared with previous year. Taking into consideration the cost impacts from acquired companies, the total operational cost decreased by 7.4%. EBITDA margin in Q4 2011 ended at 5.1% versus 4.6% last year.
For the full year 2011 the revenue was MNOK 5,809.3, up 37.9% y-o-y. EBITDA for the year ended at MNOK 257.8, up 42.1%, implying an EBITDA margin of 4.4%. Organically, the total revenue grew by 8.3%, to be compared with IDC predictions showing a growth of 4.0%. Hence, Norway, in a year with major integrations of acquired companies, has gained market shares.
On 29 December Atea AS in Norway entered into agreement to acquire Sunnmøre Kommunikasjon AS in Ålesund, which is specialized in telecommunications solutions. In 2010 Sunnmøre Kommunikasjon had revenue of MNOK 12 and EBITDA of MNOK 3. The company generated revenue of MNOK 14 and EBITDA of MNOK 4 in 2011. The company has a strong position in the north- western part of Norway, with several large international customers, especially within the maritime sector. The agreed transaction value (enterprise value) is MNOK 14.
Sweden
Revenue reached MNOK 2,041.1 in Q4 2011, which is up 2.5% (2.7% in constant currency) compared with last year. Product revenue was up 1.2% and consulting and services revenue was up 9.5% in constant currency.
EBITDA for Q4 2011 ended at MNOK 113.6, up 14.7% in constant currency. Product margins ended at 13.3% for Q4 2011, an increase from 11.2% for Q4 2010, due to a favourable product mix. The strong increase in consulting and services revenue is causing higher use of subcontractors which has a negative effect on the services margins. Organically, total cost of operation is down 1.8% in constant currency compared with Q4 2010. EBITDA margin in Q4 was 5.5%, compared with 5.0% previous year.
For the full year 2011, the revenue was MNOK 6,515.9, up 24.4% (20.9% in constant currency) y-o-y. EBITDA for the year ended at MNOK 261.0, up 26.4% y-o-y (22.9% in constant currency). The EBITDA margin ended at 4.0%. Organically, revenue grew by 7.3% in constant currency, to be compared with an IDC predicted growth of 2.8% for the full year. Thus Sweden has gained considerable market shares.
Denmark
Revenue in Q4 2011 ended at MNOK 1,772.3, down 3.2% (0.0% in constant currency) compared with Q4 2010. Product revenue was down 1.2%, while consulting and services revenue was up 5.1% in constant currency. Organically, revenue was down 1.4% in constant currency.
EBITDA ended at MNOK 129.7, up from MNOK 107.6 in Q4 2010 (up 24.3% in constant currency). Total gross margin in Q4 ended at 20.1%, up from 18.7% previous year, mainly reflecting increased services content. Organically, operational cost shows a decline of 2.2% in constant currency compared to Q4 2010. The EBITDA margin increased from 5.9% in Q4 2010 to a record high 7.3% in Q4 2011.
For the full year 2011 the revenue was MNOK 5,766.2, up 3.5% (6.4% in constant currency) y-o-y. EBITDA for the year ended at MNOK 285.0, up 19.2% (22.5% in constant currency) y-o-y. EBITDA margin ended at 4.9% compared with 4.3% for 2010. Organically, revenue grew by 5.3% in constant currency, to be compared with an IDC predicted growth of 1.2% for the full year. Thus Denmark has gained market shares.
Finland
Revenue in Finland in Q4 2011 ended at MNOK 501.0, down 6.0% (down 2.7% in constant currency) compared with Q4 2010. Product revenue was down 3.1%, while consulting and services revenue was up 2.2% in constant currency. Organically, revenue declined by 4.0% in constant currency. However, revenue development is considered good in light of delayed deliveries related to public frame agreements.
EBITDA in Q4 2011 ended at MNOK 19.3, compared with MNOK 17.9 in Q4 2010, up 11.5% in constant currency. Improved margins and mix (products vs services) are causing the total gross margin to improve from 14.8% to 15.9% from previous year. EBITDA margin improved from 3.4% in Q4 2010 to 3.8% in Q4 2011.
For the full year 2011 revenue was MNOK 1,717.6, up 0.1% (2.8% in constant currency) y-o-y. EBITDA for the year ended at MNOK 47.9, up 35.4% (39.1% in constant currency). EBITDA margin improved from 2.1% in 2010 to 2.8% in 2011. Organically, the revenue fell by 0.9% in constant currency, to be compared with an IDC predicted growth of 3.2% for the full year. The revenue was influenced by reduced public spending.
The Baltics
Revenue in Q4 2011 was MNOK 165.3, which is up 8.3% (up 11.9% in constant currency) from Q4 2010.
EBITDA in Q4 2011 ended at MNOK 9.5, compared with MNOK 9.8 in Q4 2010. EBITDA margin ended at 5.7%, down from 6.5% in Q4 2010, but is still at a satisfying level.
For the full year 2011 the revenue was MNOK 436.1, up 8.7% (11.7% in constant currency) y-o-y. EBITDA for the year ended at MNOK 20.0, up 31.3% (34.9% in constant currency) y-o-y. EBITDA margin increased from 3.8% in 2010 to 4.6% in 2011.
At the beginning of September UAB Atea in Lithuania entered into agreement to acquire UAB Elsis IT with 86 employees and expected revenue of MNOK 93.6 and EBITDA of MNOK 6.2 in 2011. Elsis IT is the third largest IT infrastructure company in Lithuania. Atea has acquired 100% of the shares from the Elsis Group. The agreed transaction value is MNOK 25.1 and enterprise value is estimated to MNOK 30.0. The transaction was effective from 28 November 2011.
Outlook
The financial turmoil in Europe has also impacted the Nordic IT infrastructure market as market growth in the second half of 2011 was only slightly positive.
IDC's preliminary 2012 forecast for Atea's addressable market shows an expected growth of 2.8%. The primary reason for the expected growth is that a number of projects which was scheduled to take place in the second half of 2011 is postponed and will instead be carried out in 2012. IDC sees the growth in the hardware market primarily driven by smartphones and tablet PC's and the growth in the software market is primarily driven by roll-outs of large Windows 7 projects.
Over the last years Atea has invested in high growth areas such as Collaboration, Mobility, Virtualization, Software Asset Management, Windows 7, Consumerization and Green IT. Leveraging on these investments in high growth areas gives comfort that Atea can continue to grow at a pace which is faster than the market in general.
On 23 November 2011 Atea launched the strategy "Together Towards the Top", which sets the scene for Atea's development towards 2015. The target in the new strategy is to increase revenue to NOK 30 billion and EBITDA to NOK 1.8 billion by 2015. During 2012 Atea will initiate the implementation of the key initiatives from the new strategy. These key initiatives include increasing services revenue and in particular contracted services revenue, dedicated sales focus on mid-market and international customer groups, together with a continued focus on operational excellence.
Equity and cash flow
Shareholders' equity as of 31 December 2011 was MNOK 3,881.9 and non-controlling interests were MNOK 3.5, corresponding to an equity ratio of 38.0%, up from 34.8% compared to 31 December 2010.
The Group generated an operational cash flow of MNOK 1,051.5 in Q4 2011, which was MNOK 520.1 above corresponding period last year. Working capital optimisation has a continuous high focus within the organisation and together with the seasonal decline in working capital and strong cash earnings, the quarter was very satisfying. For the full year the Group generated an operational cash flow of MNOK 1,054.8, which was MNOK 468.3 above corresponding period last year. The working capital ratio as of 31 December 2011 was -0.1% which is down from 0.7% as of 31 December 2010.
During Q4 2011 capital expenditures were MNOK 57.3. MNOK 19.2 are related to reclassification of leasing agreements entered into during 2011, from operational to financial leasing. Payments regarding acquisitions were MNOK 109.1. The acquisition payments are related to the purchase of FotoPhono AS and Sunnmøre Kommunikasjon AS in Norway and UAB Elsis IT in Lithuania.
End of Q4 2011 the Group was net cash positive with MNOK 289.0, compared to a net interest bearing position end of Q3 2011 of MNOK 599.5. Cash reserves including unutilised credit facilities as of 31 December 2011, were MNOK 2,066.7.
For further information, please contact:
Claus Hougesen, CEO Atea ASA, Mobile +45 3078 1200
Rune Falstad, CFO Atea ASA, Mobile +47 906 14 482
Enclosures on www.newsweb.no
Please go to www.atea.com/reports for the quarterly report and presentation.
Video of the press conference is available at www.atea.com/webcast
About Atea
Atea is the leading Nordic and Baltic supplier of IT infrastructure with approximately 5800 employees. Atea is present in 79 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 had revenue of more than NOK 20 billion in 2011 and is listed on Oslo Stock Exchange.
www.atea.com
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