Press conference EDB ErgoGroup


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Presentation from press conference combination of EDB and ErgoGroup

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  • Dag Mejdell:
  • Dag Mejdell tar ErgoGroup Arve Johansen tar EDB
  • Arve Johansen
  • Arve Johansen
  • John Arne Haugerud
  • John Arne Haugerud
  • John Arne Haugerud om EDB Terje Mjøs om Ergo
  • Terje Mjøs
  • Terje Mjøs
  • Terje Mjøs
  • Terje Mjøs
  • Press conference EDB ErgoGroup

    1. 1. Press conference Oslo 07.06.2010
    2. 2. Disclaimer <ul><li>This presentation (the “Presentation”) has been prepared by EDB Business Partner ASA (“EDB”) and ErgoGroup AS (“ErgoGroup”, and together with EDB, the “Companies”) and speaks as of 7 June 2010. The delivery of this presentation shall not, under any circumstances, create any implication that there has been no change in the affairs of the Companies since such date. </li></ul><ul><li>To the best of the knowledge of the Companies, the information contained in this Presentation is in all material respect in accordance with the facts as of the date hereof, and contains no material omissions likely to affect its import. However, no representation or warranty (express or implied) is made as to, and no reliance should be placed on, any information, including projections, estimates, targets and opinions, contained herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein. </li></ul><ul><li>This document contains certain forward-looking statements relating to the business, financial performance and results of the Companies and/or the industry in which they operate. Forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words “believes”, expects”, “predicts”, “intends”, “projects”, “plans”, “estimates”, “aims”, “foresees”, “anticipates”, “targets”, and similar expressions. The forward-looking statements contained in this Presentation, including assumptions, opinions and views of the Companies or cited from third party sources are solely opinions and forecasts which are subject to risks, uncertainties and other factors that may cause actual events to differ materially from any anticipated development. None of the Companies or any such person’s directors, officers or employees provides any assurance that the assumptions underlying such forward-looking statements are free from errors nor does any of them accept any responsibility for the future accuracy of the opinions expressed in this Presentation or the actual occurrence of the forecasted developments. The Companies assume no obligation to update any forward-looking statements or to conform these forward-looking statements to our actual results. </li></ul><ul><li>An investment in the Companies involves risk, and several factors could cause the actual results, performance or achievements of the Companies to be materially different from any future results, performance or achievements that may be expressed or implied by statements and information in this presentation, including, among others, risks or uncertainties associated with the Companies’ business, segments, development, growth management, financing, market acceptance and relations with customers, and, more generally, general economic and business conditions, changes in domestic and foreign laws and regulations, taxes, changes in competition and pricing environments, fluctuations in currency exchange rates and interest rates and other factors. Should one or more of these risks or uncertainties materialise, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this presentation. The Companies do not intend, and does not assume any obligation, to update or correct the information included in this Presentation. </li></ul><ul><li>This Presentation does not constitute any offer to sell, or an invitation to purchase, any securities. </li></ul>
    3. 3. Introduction <ul><li>Dag Mejdell </li></ul><ul><li>Chairman, ErgoGroup AS </li></ul>Arve Johansen Chairman, EDB Business Partner ASA
    4. 4. A landmark transaction creating a Nordic IT champion <ul><li>EDB Business Partner ASA and ErgoGroup AS to be combined </li></ul><ul><li>Bringing 50 years of IT innovation together to create even faster, better and more competitive services for the customers </li></ul><ul><li>Two largest IT companies in Norway creating: </li></ul><ul><ul><li>Largest IT company in Norway </li></ul></ul><ul><ul><li>Second largest IT Services company in the Nordics </li></ul></ul><ul><li>Strong competence and technology base creates attractive opportunities for employees </li></ul>Source: Latest IDC report (Jan 2010) Total market size is approx NOK 130bn
    5. 5. Bringing 50 years of IT innovation together EDB ErgoGroup Nordic leadership 1961: Established as Elektronisk Databehandling AS 2000: Acquistion of Fellesdata 2002-2008: Acquisitions to strengthen customer and service portfolio 2007: Global sourcing through acquisitions in Ukraine and India 1972: Established as Statens Driftssentral 2001-2005: Acquisitions to strengthen customer and service portfolio 1995: Posten aquires Statens Datasentral SDS 2006: Establishing regional Nordic presence through Allianse and SYSteam 2007: Acquisition of Bekk Consulting 2001: Established in Sweden 1999: Merger of AS EDB and Telenor Programvare 2008: Global sourcing through acquisition of ION
    6. 6. Transaction structure <ul><li>Merger of equals and exchange ratio based on relative contributions </li></ul><ul><li>EDB’s shareholders will hold 53.0% and ErgoGroup’s shareholder Posten will hold 47.0% of the equity in the combined company </li></ul><ul><li>Up to NOK1.0bn in share issue after closing, to strengthen balance sheet and provide strategic and financial flexibility </li></ul><ul><li>Telenor will participate pro rata to maintain 27.2% ownership in the combined company </li></ul><ul><li>Posten will reduce shareholdings after share issue, down to 40% within two years following closing of the transaction, and remain a long term shareholder in the combined company </li></ul>
    7. 7. Corporate governance <ul><li>Proposed chairman of the board: Arve Johansen </li></ul><ul><li>Proposed board composition: Other five directors will be elected by its shareholders on the EGM </li></ul><ul><li>Proposed CEO: Terje Mjøs </li></ul><ul><li>Proposed deputy CEO: John-Arne Haugerud </li></ul><ul><li>The new interim name of the company will be EDB ErgoGroup ASA </li></ul><ul><li>The new company will be headquartered in Oslo </li></ul>
    8. 8. Presentation of the combined company Terje Mjøs Proposed CEO, EDB ErgoGroup ASA John-Arne Haugerud Proposed deputy CEO, EDB ErgoGroup ASA
    9. 9. Overview of the combined company Revenue of NOK 12.7 bn and approx 10,000 employees 3 58% 17% 25% Revenue by segment (’09) Revenue by country (’09) Employees by country ('09) 53% Consulting IT Operations Solutions 71% 29% 53% 17% 2% 27% International Norway Norway Ukraine and India Other Sweden SME will represent approx 17% of EDB ErgoGroup
    10. 10. Long term partnership with Nordic customers enables growth
    11. 11. Contribution from EDB and ErgoGroup EDB Contribution ErgoGroup Contribution <ul><li>Long term partnership with large Nordic customers </li></ul><ul><li>Scalable IT operations with global sourcing </li></ul><ul><li>Bank & Finance vertical ready to expand international </li></ul><ul><li>International consulting unit </li></ul><ul><li>Strong footprint in Nordic SME segment </li></ul><ul><li>Leading position in Public sector </li></ul><ul><li>Third party partnerships supporting own business and segment competence </li></ul><ul><li>Wide portfolio of consulting services </li></ul>
    12. 12. Strategic benefits of the merger <ul><li>Second largest IT service provider in the Nordics </li></ul><ul><li>Strong delivery capabilities within growing segments: </li></ul><ul><ul><li>Banking and Finance </li></ul></ul><ul><ul><li>Public sector </li></ul></ul><ul><ul><li>SME </li></ul></ul><ul><li>Cost synergies enabling improved competitive advantage and EBITA </li></ul><ul><li>Financial strength with platform for further expansion </li></ul>
    13. 13. From Norwegian outsider to significant service provider in Sweden L Largest IT company in Norway Top 5 IT service provider in Sweden <ul><li>Combined total revenues of NOK 9.0 bn </li></ul><ul><li>Approx. 5,200 employees at 49 offices </li></ul><ul><li>A strong combined service portfolio both towards both large companies and the SME market </li></ul><ul><li>Combined revenue of SEK 3.5 bn </li></ul><ul><li>Approx 2,700 employees at 60 offices </li></ul><ul><li>Strong complimentary service offering </li></ul><ul><li>Joining forces for further growth in the Swedish market </li></ul>Focus on Nordic and international growth opportunities
    14. 14. Expected synergies of NOK 250-350m <ul><li>Based on preliminary analysis, the transaction is expected to benefit from annual synergies in the range of NOK 250-350m </li></ul><ul><ul><li>One-off cost estimated to be one year of full synergies </li></ul></ul><ul><li>Most of the synergies are cost related: </li></ul><ul><ul><li>FTE rationalisation </li></ul></ul><ul><ul><li>Server consolidation </li></ul></ul><ul><ul><li>Single accounting of software licenses </li></ul></ul><ul><li>Other cost synergies will come from: </li></ul><ul><ul><li>Consolidation of solution portfolio </li></ul></ul><ul><ul><li>General cost and administration </li></ul></ul><ul><ul><li>Capex </li></ul></ul><ul><li>Revenue synergies are anticipated: </li></ul><ul><ul><li>More competitive in tender offers </li></ul></ul><ul><ul><li>Significant service provider in Sweden </li></ul></ul><ul><ul><li>Sharing of best practice </li></ul></ul>
    15. 15. Planning and integration <ul><li>Planning phase will run from announcement to closing </li></ul><ul><ul><li>Key deliverables are a clear strategy with a new organisational structure in a detailed 100 day plan </li></ul></ul><ul><li>Dedicated program office (Integration Management Office) will manage the process </li></ul><ul><li>At the appropriate time, employee representatives will be involved in the planning in all relevant areas </li></ul><ul><li>Key principles for the process are: </li></ul><ul><ul><li>Merger of equals </li></ul></ul><ul><ul><li>Openness </li></ul></ul><ul><ul><li>Timeliness </li></ul></ul><ul><ul><li>Involvement </li></ul></ul><ul><ul><li>Dialogue </li></ul></ul><ul><li>Clear strategic direction of the new company </li></ul><ul><li>Strong momentum from day 1 </li></ul>Preparation phase Execution Q2 2010 Q4 2010
    16. 16. Financials and timeline Kristian Kuvaas Johansen CFO, EDB Business Partner ASA
    17. 17. Financial overview EDB ErgoGroup Goodwill Other assets Cash Int. bearing debt Other liabilities Equity Goodwill Other assets Cash Int. bearing debt Other liabilities Equity NOKm NOKm Note: Balance sheet figures as per Q1 2010
    18. 18. Financial strength with platform for further expansion <ul><li>Key financial figures from combining the 2009 reported numbers for the two companies (approx figures): </li></ul><ul><ul><li>Revenues of NOK 12.7bn </li></ul></ul><ul><ul><li>EBITDA of NOK 1.8bn </li></ul></ul><ul><ul><li>EBITA of NOK 1.2bn </li></ul></ul><ul><ul><li>Net debt of NOK 3.9bn </li></ul></ul><ul><ul><li>Equity book value of NOK 4.3bn </li></ul></ul>
    19. 19. Share issue will increase free float and strengthen capital structure ) + = NOKm Net debt (NOKm) Equity Net Debt Equity Net Debt EDB Ergo Group Posten 47% Net Debt Telenor 27% Other 26% % Illustrative transaction overview pre share issue Illustrative capital structure post share issue NOKm Share issue (NOKm)
    20. 20. Timeline to closing <ul><li>Preliminary timeline </li></ul><ul><ul><li>Call for EGM on 8 June </li></ul></ul><ul><ul><li>Distribution of merger plan and IM on or about 17 June </li></ul></ul><ul><ul><li>EGM on 8 July </li></ul></ul><ul><ul><li>Expected closing in Q4 2010 </li></ul></ul><ul><li>Transaction is subject to </li></ul><ul><ul><li>Confirmatory due diligence </li></ul></ul><ul><ul><li>Shareholder approvals </li></ul></ul><ul><ul><li>Regulatory approvals </li></ul></ul>
    21. 21. Q&A with presenting team <ul><li>In addition, Q&A session on a conference call at 16.00 CET today </li></ul><ul><li>Dial-in at +47 21 52 76 71 followed by *6539* </li></ul>